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Surplus of Vacant Lots will Prolong Builders' Pains

This lot in Farmington Ranches is one of nearly 3,000 vacant lots listed in Davis County in 3Q 2009. NewReach estimates it will take four years before the supply in Davis County will be depleted.

 

By Kelly Lux
Real Estate News Utah Editor
 
The ample supply of vacant lots along the Wasatch Front will help to prolong the pain felt by Utah developers, according to a housing analyst at NewReach.
 
“There are lots and lots of lots on the market right now,” said VP of Housing/Senior Housing Analyst Todd Cook during the October NewReach Housing Forecast at the SLCC Miller Conference Center. “And it is going to take us a long time to get through the lots based on the number of home closings we have seen.”
 
The number of home closings increased in nearly every county along the Wasatch Front, Cook said. Builders have been crediting the influx to the federal and state tax credits made available to homebuyers, he said.
 
Salt Lake County increased by nearly 300 closings from 2Q to 3Q, recording 651 closings in 3Q 2009 — more than any other county in the area, according to Cook.  Utah County was close behind with 592 closings, up from nearly 450 closings in 2Q.
 
NewReach compared the number of closings in 3Q to the number of vacant lots in the same time frame to determine how long before the supply of lots would be depleted.
 
Salt Lake County had approximately 6,000 vacant lots during 3Q, second next to Utah County which had close to 11,000 vacant lots. Compared to the number of closings in 3Q, NewReach calculated that the number of vacant lots in Salt Lake County would be depleted within three years.
 
With those 11,000 available lots in Utah County, more than any other county in the Wasatch Front, NewReach estimated the supply will be exhausted within six years. Weber County, which had more than 3,000 lots available, will also need six years to deplete its supply.
 
Washington County, with close to 5,000 available lots and 152 closings in 3Q, has 11 years of supply, Cook said. In 3Q, 182 lots were introduced in the area.
 
“We have plenty of lots down there. And more phases and more products were introduced,” said Cook, pleading with the present builders to do their research before building in Southern Utah. “Please do your due diligence and make sure it is a product that isn’t saturated down there. … I want very badly for this area to succeed, but I think we still have some pain in St. George.”
 
Washington County isn’t the only area that will still feel some pain.
 
Wasatch County, which closed 37 attached and detached homes in 3Q, will need 21 years before it can exhaust its more than 2,000 vacant lots, Cook said. Only a few projects in the area did well. And no new lots were added to the inventory during the last two quarters, he added.
 
While it may take some time before the supply of vacant lots catches up with demand, Cook said the number of unoccupied homes in Utah has declined substantially. Salt Lake, Utah, Davis, Wasatch, Weber, Tooele and Washington counties all saw declines in the number of unoccupied homes from 2Q 2009 to 3Q 2009.
 
“We firmly believe we have seen the worst of the market in terms of unoccupied homes,” Cook said.
 
However, most of the unoccupied homes within Utah County are listed for more than $350,000 — a market segment that will be difficult to deplete, Cook said.
 
“Those homes will have to be reduced or remain on the market for quite some time,” he said.
 
To obtain the full NewReach report on the housing market, visit the NewReach Web site at www.NewReach.com or email sales@NewReach.com.