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Homebuilders face future shortage of “quality” lots

By Chelsey Levingston - Staff Writer

Ready-to-build land is the next big challenge facing Dayton homebuilders.

It’s one of the concerns confronting homebuilders, along with rising costs of building materials, low-valued appraisals and finding enough skilled laborers.

As new home construction activity has picked up in the Dayton area, builders are filling lots of land in subdivisions left over from when demand plummeted in the housing crisis.

Homebuilding is expected to continue to slowly improve through 2013. If this turns out to be a good year for local homebuilders, this time in 2014 builders say it could become a real issue.

“I think the problem will get progressively worse as we have chewed through the inventory of lots, and then it will take a little while to bring new lots online to hopefully fill a demand that should be there,” said Walt Hibner, executive director of Home Builders Association of Dayton.

It takes time for a new development to get though the approval and financing process.

“We’re getting through all the lots that were in the ground and a lot of them were heavily discounted to sell,” Hibner said. “We’re hearing about people submitting drawings for approvals for new developments, but it’s a multi-year process, so it takes a while for them to get approved before we start building on them.”

And credit is still tight for developers to buy land to start a new project without signed homebuyers in hand.

“There’s very little speculative building,” said Robert Ware, Warren County senior planner. “Another thing too I hear from the development community is the banks are still very reluctant to lend towards speculation.”

Construction is expected to start this summer on houses in a new subdivision in Riverside. Plans are for 53 homes to be built in the first phase of the subdivison Brantwood. The land was rezoned from commercial property.

Also a new residential subdivision, The Bluffs on Trebein, is in the works in Fairborn. The city is in the process of annexing 80 acres from Bath Twp. for the development.

For the most part, home builders and developers are moving into new phases of existing subdivisons, said home builders and government planners.

Potterhill Homes recently developed 22 lots in Walnut Creek in Lebanon to build on, said president Carolyn Rolfes. Potterhill, based in Milford, in the Cincinnati area, is a family-owned production builder of homes that sell for an average $180,000.

This year Potterhill and sister company Freedom Homes are on track to build about 130 new houses altogether in the Cincinnati area, including Warren County, Rolfes said.

“I think that land is starting to become scarce in certain markets where it was already scarce going into this recession and where demand has traditionally been high,” she said.

“Almost all of the ‘A’ lots have been spoken for by a builder.”

She calls ‘A’ lots the best quality lots located in a high-demand community, with a top-rated school district and in a place people are moving to. For example, Rolfes said Mason could see a lot availability shortage.

“We’re working our way through now to the ‘B’ lots,” she said.

New phases were approved at the end of 2012 and the beginning of this year in Villages of Winding Creek, Soraya Farms and Trails of Shaker Run in Clearcreek and Turtlecreek townships in Warren County, said Ware of planning.

Warren County was a hot spot for homebuilding prior to the recession but “we’ve seen no new raw ground come in for proposed preliminary plats,” Ware said.

“All of it’s pretty much proceeding with final plat sections of developments that were in place,” he said. “Prior to the turn of the market, we were seeing undeveloped land or prior land that hadn’t had any planning.”

Dayton area developer and builder Charlie H. Simms said the issue’s not necessarily the lack of land.

“It’s an issue of financing and the cost of developing lots at a competitive price,” Simms said.

Compared to the existing home sales market, new construction today is still more expensive to a homebuyer, which holds back new construction activity overall.

“Finding an A and D (acquisition and development) loan right now is almost impossible unless you want to pay down 50 percent,” Simms said.

A total 1,715 new residential building permits were issued in the Dayton area for 2012, up 3.3 percent from 1,660 permits issued in 2011, according to data supplied to the Dayton builders group by Cincinnati real estate firm NPG DataQuest. The Dayton area includes Darke, Greene, Montgomery and Preble counties, northern Warren and Butler counties, and part of Miami County.

The number of building permits issued in 2012 was up 13 percent from the 1,517 permits issued in 2010, the worst year the past decade for Dayton homebuilding activity.

Figures include permits for new single family homes, condominiums and apartments.

Staff writer Steven Matthews contributed to this report

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