Exclusive: Reduced builder demand sends lot supplies soaring

According to preliminary data from the housing intelligence company Zonda for the first quarter, San Antonio's housing inventory has reached a tipping point.

The number of developed lots, that is, those that are finished and ready for a builder, has risen to the point where it is oversaturated.

Zonda data indicates that in the first quarter 2023 there will be 24.4 months of VDL available in San Antonio. This is just above the tipping point of 24 months, which the company considers to be oversupply. This number is a year below the previous year's 12.3 month supply.

Mike Yantis is the founder of Yantis Land LLC in San Antonio, and he said that the start rates were way lower during the third quarter of 2023 than they had been before. "But there were already developments in place, and it wasn't worth the expense for many developers to mothball them until new starts returned."

He said it's hard to find a stop point, especially when there are new roads, underground water and electricity infrastructure, and new power lines.

Many of these lots are by builders who also self-develop. "I don't think I know any third-party developers that have started a development since summer 2022 because it has been difficult to find a builder who will commit. This means that it is harder to obtain a bank loan," Yantis said.

Self-developing builders, who account for almost two thirds of the San Antonio market, have also sold their developed vacant lots to other homebuilders. M/I Homes, based in Columbus, Ohio, has acquired lots at Everly Estates, on the East Side of Houston, from Empire Communities, as well as more East Side Lots from Colorado's Century Communities.

Zonda data shows that the number of starts has increased to 2,724 compared to the 2,359 in the last quarter -- an increase of 15% -- but it is unclear whether the anticipated spring shopping season will spur demand for new lots, and reduce some stagnant inventory.