The supply of vacant residential lots in the Chicago area has barely budged over the past year, according to Crain’s Chicago Real Estate Daily.
Developers were sitting on 48,905 lots ready for new single-family homes, duplexes or townhomes at the end of the first quarter this year, down from 49,047 at the end of the fourth quarter and 50,493 a year earlier, according to Metrostudy, a Houston-based research firm that tracks the housing market.
Based on current demand, according to Crain’s, the Chicago market has a 22-year supply of lots, up from 21 years at the end of the fourth quarter, according to Metrostudy. Prior to the housing slump, the average supply was just 16 to 18 months.
“The real issue is not that the number of lots on the ground, but more so the fact that demand is almost non-existent,” says Chris Huecksteadt, manager of Metrostudy’s Chicago division. “If Chicago were starting from 10,000 to 15,000 homes per year, the amount of inventory in the market would be considered ‘normal.’”
Metrostudy tracks lots that have sewer, water and road access but are sitting empty because builders, awaiting buyers, haven’t started construction. The report covers nine counties in the greater Chicago area.
DeKalb (79), Grundy (73), McHenry (41) and Will (33) counties all have more than 30 years of lot supply, while Cook (13), DuPage (7), Kane (16), Kendall (25) and Lake (14) counties all have 25 or less years of supply, according to Metrostudy.
“We’re in a holding pattern still,”Suzy Kogen Friedman of Northbrook-based homebuilder KZF Development told Crain’s. “I don’t see any light at the end of the tunnel.”
The first-quarter inventory represents an 11 percent decline from the peak in first-quarter 2008, when the lot supply totaled 54,855, according to Metrostudy.
New housing starts in the area totaled 2,238 in a 12-month period ending March 31 of this year. In addition, builders started just 410 homes in the first quarter, according to Metrostudy. That’s the lowest single-quarter number recorded since Metrostudy began tracking the Chicago market in 1990.