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Tuesday, February 24, 2009

Greater Asheville's Shadow Inventory?

John Boyle of The Asheville Citizen Times had a column yesterday that addresses some pertinent questions. (ED Note: Citizen Times articles eventually disappear from their original locations).

He examines the growing number of new mountain lifestyle communities that have fallen on hard times lately:
Every time I read another story about a high-end real estate development halting building, staving off creditors or going under, I can't help but think of the boom the mountains saw in the 1920s.
Later in the article are some comments that get to the heart of the matter, begging the question of what it all means for the market (emphasis added):
Great Depression chills, anyone?

“Absolutely,” said Jim Coman, a planner for Buncombe County. “I've got a whole drawer full of plans and drawings for subdivisions and developments that I don't think will ever be built. I see a very close parallel to the Great Depression.”
Shadow Inventory
The local market, already oversupplied, will have to deal with the fallout from so many approved subdivisions now idle or nearly so. For those developers who survive, their projects will presumably restart. This represents a portion of what some have called pent up supply or shadow inventory that will hit the market in the future.

Even those developments that ultimately fail will contribute to inventory in some way, land or unfinished homes. Will it be enough to slow down a recovery? Too many variables is the quick answer.

Hyperlocal View
In our home county, there is a 7,000 acre area with 4 or 5 planned communities, now in various stages of slowdown. As many as 3,000 homes were once planned there, not to mention extensive amenities. And this is around 30 miles from Asheville, in a county with a population of 19,000.

In the five county Western region the number of planned homes has to be in the five figure range, 20,000 new homes?. More? One thousand here, 800 for that community over there, it adds up after a while.

The Metro Atlanta region is grappling with the same, but more widespread problem. 148,000 lots have been approved there for building.

Related & Unexpected
2008 was a great year for land conservancies in Western NC.

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1 Comments:

Anonymous Richard Stabile Bergen County Real Estate said...

The shadow inventory will stay at bay until the market gets going a bit. The money coming in from the government to the mortgage market should help this spring. all the programs and liquidity should make a difference. Once it gets going, people will jump on board. The builders are kind of shy to take risks now, and rightfully so. If you had a lot of developable and your market did not go up like the big speculative markets,(Florida, So Cal, Nevada, Arizona) than you will grind up the inventory on a regular basis soon.
As the money hits, and it is starting to, the programs for funding will get going and the market will roll.

8:06 PM  

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