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IPFS News Link • Housing

Land Scarcity Sparks Another Bottleneck For Housing Market

•, by Tyler Durden

According to Bloomberg, Ali Wolf, the Chief Economist at Zonda, which analyzes housing market data, said everyone knows about the supply-driven issues when sourcing raw materials for a build. Lumber prices have been driven up due to shortage and the lack of new mills coming online, copper and other base metal prices are through the roof, concrete is getting more expensive, and many other building materials are rapidly increasing over the past year. 

Ali explained besides surging building costs. There's an overlooked issue that's starting to become a significant bottleneck for homebuilders and or anyone who wants to build a new home, which is a shortage of ready-to-build lots.

 An infographic from Zonda explains low inventory is at the lowest level on record. 

As Ali explained: "A value of 100, represents perfect equilibrium, while a value of 125 and above equals "Significantly Oversupplied", 115-125 – "Slightly Oversupplied", 85-115 – "Appropriately Supply", 75-85 – "Slightly Undersupplied", and 75 and below – "Significantly Undersupplied." Basically every market is considered "significantly undersupplied" today, including the national figure.

There's a perfectly reasonable explanation for a shortage of ready-to-build lots, mainly due to the housing market frenzy, which was sparked by the Federal Reserve sending mortgage rates to record lows after the virus pandemic struck in early 2020 caught everyone off guard. Yes, there's a lot of land out there, but buildable lots are much different. It takes time to clear the land, apply for permits, and other stuff needed to make it worthy of being buildable. This process could take upwards of a year or more.