America's housing affordability crisis is largely a supply problem, with the country currently being 4.7 million homes short of what is needed. If one home were built on every empty lot listed for sale, that shortage would shrink by more than 6 percent, according to new research from Zillow.
More than 300,000 empty lots 5 acres or smaller were listed for sale on Zillow in June, making up 17.4 percent of all for-sale listings. Building one home on each of those lots would bring the total housing deficit down to roughly 4.44 million homes, a 6.3 percent reduction from the latest estimate. The typical lot for sale is 0.57 acres — large enough, in many cases, to support more than one home, meaning the 6.3 percent figure is conservative.
“The more than 300,000 lots currently listed for sale represent the lowest-hanging fruit in addressing a housing shortage that’s two decades in the making,” Zillow Senior Economist Kara Ng, said in a release. “The challenge is making it feasible to build. Loosening zoning rules, streamlining permitting and expanding access to financing would reduce the cost and uncertainty that hold construction back, turning available lots into much-needed homes. The ROAD to Housing Act is an encouraging sign that policymakers understand what it will take to close the gap, but some of this reform will need to happen at the state and local levels.”
The five states with the emptiest lots listed are Florida (42,601), Texas (40,907), California (18,508), North Carolina (14,226) and Georgia (10,334). In states such as North Dakota, South Dakota and Alaska, empty lots make up more than one-third of all for-sale listings — 45.9 percent, 38.7 percent and 34.6 percent, respectively.
Rural markets have the highest concentration of empty lots, at 25.3 percent of all for-sale listings, compared to 13.6 percent in the suburbs and 9 percent in urban areas. Rural lots are also the least expensive on a per-acre basis with a median of roughly $75,000 per acre, compared to more than $181,000 per acre in suburban areas and about $500,000 per acre for urban lots.
Closing a gap this large requires solutions that address the problem from multiple angles. Zillow advocates for measures that make it easier and less expensive to build, such as modernizing zoning to allow more density, streamlining permitting, expanding financing options and expanding access to lower-cost housing options like manufactured homes. Manufactured homes are particularly well-suited to help close this gap, as they can be built faster and at a fraction of the cost of traditional, site-built construction, according to Zillow. Recent legislation, including the 21st Century ROAD to Housing Act, is already addressing some of those barriers.
One hurdle for buyers interested in these lots is navigating a fragmented process — finding land, selecting a home type and securing financing are typically three separate and confusing steps. Zillow is working to change that through innovative solutions. This summer, the company has been participating in a 12-week federal tech sprint with the U.S. Census Bureau's Opportunity Project; its focus is on finding ways to increase access to small-dollar housing loans in rural communities. Zillow is exploring ways to reduce frictions for consumers who are interested in purchasing and building on an empty lot.