Metrostudy Report - 2011-10-28 - It seems odd to talk about replacing developed lots in the midst of the worst housing downturn since the Great Depression. But we are at a point in the market where builders and developers are beginning to do exactly that. As of the end of the third quarter of 2011, Tampa had 2,840 annual starts in 593 “active” detached single-family subdivisions spread between Hillsborough, Pinellas, Pasco and Hernando Counties. The activity over the last twelve months was divided as follows:

• 39 subdivisions starting more than 24 homes
• 42 subdivisions starting between 13 and 23 new homes
• 43 subdivisions starting between 7 and 12 new homes
• 96 subdivisions starting between 1 and 6 new homes
• 373 subdivisions without a new home start over the last twelve months

The most active tier produced 1,422 new starts or 50.1% of all single family detached starts in the Tampa MSA. That is 6.6% of the subdivisions providing half of Tampa new housing production. This tier had 2,295 vacant developed lots remaining  at the end of 3Q 2011. Representing just a 19.4 month supply, the market equilibrium for Tampa is between an 18 to 24 months supply of developed lots. The good news is there are another 1,215 future lots within these subdivisions in the form of future phases. Builders in these top tier projects will be reliant upon these future phases within the next year and a half, or they will be looking for new subdivisions or repositioned existing lots upon which to build. This timeline grows shorter as the housing market continues to rebound, as these measures of supply are a by-product of near record low level of housing starts. Every 10% increase in starts reduces the SF months of supply of lots by nearly 2 months within these most active subdivisions.

The second most active tier produced 742 new starts or 26.1% of all SF detached starts over the last twelve months. Combined with tier 1, you have 13.7% of the subdivisions producing 76.2% of all new starts. This second tier does have 1,805 developed lots but carries no real future lots. So as tier one nears build-out on the existing lots you may see this tier gain market share just from the mere fact of available lots.

The wildcard is the zombie subdivisions that have not started a new home over the last twelve months and are continuing to reduce there standing inventory of homes built during the boom. A successful repositioning and marketing campaign could prove a valuable source of developed lots to the building industry. If these zombies remain in a coma, builders may be hard pressed to find a quality supply of lots by the end of 2013.