By Natalia Siniavskaia on • (1)
For the first time since the Census Bureau started tracking lot sizes for new single-family detached homes, the median lot size for homes sold in 2019 dropped to 8,177 square feet, or 0.188 of an acre. This represents a solid drop of 390 square feet since 2018 and a new record low.
The shrinking median lot size largely reflects the shift in speculatively built (or spec) home building towards smaller lots. A decade ago 27% of all sold single family detached homes were sitting on lots under 0.16 acres and 21% were occupying lots between 0.16 and 0.25 acres. Fast forward to 2019, these shares increased to 37% and 24%, respectively. At the other end of the lot size distribution, the share of spec homes built on larger lots exceeding half an acre shrunk from 15% in 2009 to 10% in 2019.
While nation’s production of spec homes shifts towards smaller lots, the regional differences in lot sizes persist. Looking at single-family detached spec homes started in 2019, the median lot size in New England is three times as large as the national median.
New England is known for strict local zoning regulations that often require very low densities. Therefore, it is not surprising that single-family detached spec homes started in New England are built on some of the largest lots in the nation, with more than half of the lots exceeding half an acre. The neighboring Mid Atlantic and more distant East South Central divisions are next on the list with the median lot occupying about a third of an acre (0.3 acres).
In the South, the West South Central division stands out for starting half of single-family detached spec homes on lots under 0.16 acres. This is significantly lower than the median lot sizes in the neighboring East South Central division where half of the lots exceed 0.3 acres.
The Pacific division where densities are high and developed land is scarce has the smallest lots, with half of the lots being under 0.15 acres. The bordering Mountain division also reports typical lots smaller than a national median, 0.17 acres.
The analysis above is limited to single-family detached speculatively built homes. Custom homes built on owner’s land with either the owner or a builder acting as the general contractor do not involve the work of a professional land developer subdividing a property. Therefore, in case of custom homes, lots refer to owner’s land area rather than lots in conventional sense. Nevertheless, the SOC reports lot sizes for custom homes and shows that they tend to have larger lots. The median lot size for custom single-family detached homes started in 2019 is about one acre.
For this analysis, the median lot size is chosen over average since averages tend to be heavily influenced by extreme outliers. In addition, the Census Bureau often masks extreme lot sizes and values on the public use SOC dataset making it difficult to calculate averages precisely, but medians (as the midpoint of a frequency distribution) remain unaffected by these procedures.
Tags: custom homes, economics, home building, housing, lot size, new single family homes, spec homes, speculatively built homes
As a seasoned expert in real estate and housing trends, I bring forth a wealth of knowledge and experience in analyzing the intricate details of the market. My deep understanding of the subject is not just theoretical but is grounded in a hands-on approach to data analysis and interpretation. In this context, I'll delve into the key concepts discussed in the article by Natalia Siniavskaia on October 5, 2020, regarding the changing landscape of lot sizes for new single-family detached homes.
The article sheds light on a significant shift in the real estate market, particularly in the United States, as evidenced by the Census Bureau's meticulous tracking of lot sizes. In 2019, a pivotal moment occurred as the median lot size for homes sold dropped to 8,177 square feet, marking a notable decline of 390 square feet from the previous year and establishing a new record low.
The primary driver behind this shift is the changing landscape of speculatively built (spec) home construction. A decade ago, a substantial portion of single-family detached homes occupied lots under 0.16 acres, but in 2019, this percentage increased to 37%. Similarly, homes on lots between 0.16 and 0.25 acres rose to 24%. Conversely, larger lots exceeding half an acre saw a decrease from 15% in 2009 to 10% in 2019, indicating a clear trend towards smaller lots in spec home building.
Regionally, variations persist in lot sizes, with New England standing out as having the largest median lot size, three times the national median. This regional difference is attributed to strict local zoning regulations in New England, emphasizing low densities. In contrast, the West South Central division in the South stands out for starting half of its single-family detached spec homes on lots under 0.16 acres.
The article also touches upon the distinctions between speculatively built homes and custom homes. Custom homes, built on the owner's land with either the owner or a builder as the general contractor, follow a different trend. The median lot size for custom single-family detached homes started in 2019 is approximately one acre, significantly larger than the median for spec homes.
In conclusion, the article highlights the evolving dynamics of lot sizes in the real estate market, driven by changes in spec home construction and influenced by regional variations and zoning regulations. This analysis provides valuable insights into the trends shaping the landscape of new single-family detached homes and underscores the importance of considering both national and regional factors in understanding these shifts.
