Saturday, January 10, 2009

Housing slowdown leaves Dallas-Fort Worth with lots of vacant lots

Sharp cutbacks in North Texas residential construction have left the area awash in vacant building lots.

At the end of 2008, there were more than 94,000 empty single-family home lots available in the area.

At current construction levels, that's enough for almost five years of home construction, according to a new report by Dallas-based Residential Strategies Inc.

And on top of that, almost 50,000 lots are in the pipeline but not ready to be built on yet.

With last year's 36 percent decline in home starts in the Dallas-Fort Worth area, developers are abandoning plans to push ahead with some residential subdivision developments.

"There are fewer and fewer lots under development," said Residential Strategies' Ted Wilson. "As a result, we expect to see further headway in eroding the oversupply of lots in 2009.

"There is very little speculative construction today," he said. "The market must see some further reduction in unsold inventory before new construction picks up again."

Residential Strategies estimates that there are close to 7,200 finished vacant new homes on the market in North Texas. That's down from about 9,500 at the end of 2007.

In 2008, builders here started less than 20,000 homes, the residential analyst said. That's less than half the construction volume in 2006.

New-home sales last year in Dallas-Fort Worth were down by more than 30 percent.

"Many consumers are taking a wait-and-see approach on big-ticket purchase items until there is more certainty to the economic and employment picture," Wilson said.

Thousands of completed homebuilding lots are going begging in North Texas because of the sharp reduction in new-home construction. Here's a look at the number of lots available at the end of each year and month's supply:
2005 95,181 24.1
2006 95,589 23.9
2007 98,575 38.6
2008 94,242 58.0

SOURCE: Residential Strategies