91视频

While the metro-area housing market appears poised to improve in 2013, at least one big problem looms on the horizon. A lack of developable lots may suffocate new home construction, according to Wally Remmers, vice president of Arbor Custom Homes.

鈥淭he lot shortage is very real,鈥� he said. 鈥淚’ve been in the industry a long time and I’ve never seen anything like this 鈥� We’ll be in the situation over the next 12 to 24 months where there won’t be enough lots for the amount of buyers that will be in our market.鈥�

The simple reason is that no one has developed land for home construction because of the recession. Remmers said that when the economy fell apart, much of the land went to banks. Over the past few years, banks have sold that land to developers at significant discounts, and builders have added housing.

Now, little exists for new construction.

鈥淭hat’s actually a subject of considerable concern for us,鈥� said Jon Chandler, CEO of the Oregon Home Builders Association. 鈥淭here’s not much in the pipeline in any place in the state 鈥� the foreclosed inventory has been burned through, not much has happened since and the banks are not lending money. So we’re kind of stuck.鈥�

Chandler said that even if development were to start today, the process to secure necessary permits and entitlements could last two years. And while banks have begun lending for home construction, they still believe land development is too risky.

John Satterberg, president of Community Financial Corp., a financial institution specializing in construction and land development, said he is aware of the looming lot shortage. Community Financial has made several development loans over the past year and Satterberg said money is available for the right place, the right borrowers and the right product.

鈥淪ingle-family houses are selling like hotcakes,鈥� he said. 鈥淲e’re seeing multiple offers 鈥� 60 days prior to (construction) completion. It’s a really good market right now.鈥�

With that said, Community Financial prefers to make loans to builder-developers rather than parties looking to develop lots on spec. Developers should come to the loan table with at least 20 percent cash in hand, he said.

The lot shortage shouldn’t be a problem for Arbor Custom Homes. The company is in the process of acquiring entitlements for 700 new units in the North Bethany area 鈥� an undeveloped neighborhood with a master plan adopted by Washington County. Arbor hopes to break ground in May or June 2013 on developments that include 125 single-family homes, 131 townhomes and 420 condominiums or apartments.

The company presently is developing 335 units in the Arbor Oaks neighborhood. The company has already built and sold 300 homes there, and Remmers said demand is growing by leaps and bounds.
In 2011, the company sold 30 homes in Arbor Oaks. In 2012, it sold 120.

鈥淭he difference is, in 2012 I could have sold way more than that,鈥� Remmers said. 鈥淚 just didn’t have them. I didn’t have the lots.鈥�

Remmers said that while the company projected 350 starts for single-family homes and apartments in 2012, it has started 372 鈥� the most since 2008. All of those homes have been sold and now the company is fervently pushing dirt to make room for more.

Arbor’s new homes will be priced between $150,000 and $500,000. Remmers said he looked forward to introducing affordable homes to the area, while maintaining its focus on luxury living.
Arbor has streamlined development in Washington County, where it sees the most opportunity for growth 鈥� especially with Nike and Intel expanding. As a result, Remmers said, Arbor has reduced its debt and increased relationships with lenders. That promises to keep the company and its vendors busy over the next year.

But for companies that don’t possess land or the ability to put a significant down payment on a loan, 2013 could be a tough year, according to Remmers.

鈥淏anks will loan on buying a new house, or a builder to build a new house, but they don’t want to loan on land development,鈥� he said. 鈥淚t’s too risky and they’re not there yet.鈥�