development

Just five years ago at the depth of the recession, lots that were ready to build on were as common in Southwest Florida as, well, dirt.

“Nobody needed to start homes, and you could buy half-completed subdivisions,” said David Cobb, South Florida regional director of new home research firm Metrostudy, a division of Washington, D.C.-based Hanley Wood. “There was no new inventory of lots.”

What a difference a housing boom makes.

In Collier and Lee counties combined, the months of supply of lots in the second quarter of 2015 were only a quarter the level it was in the fourth quarter of 2009, Metrostudy reported.

That is, it would take nearly 35 months to sell all of the lots on the market in Southwest Florida at the current sales pace in the second quarter; but at the end of 2009, it would have taken 135 months.

But the actual number of so-called “finished” lots — that is, vacant lots with all the infrastructure and grading completed and regulatory approvals granted — actually didn’t change very much during the nearly six-year period.

At the end of the second quarter, there were 12,633 lots available; at the end of 2009, 13,559.

The difference, Cobb explained, is that as building began to ramp up after the recession, builders used up the supply of existing lots.

By the end of 2012, these were gone, he said; since then, developers have had to create new lots out of raw land, mostly agricultural.

But that’s not a quick or easy process, Cobb stressed, and can take as long as two years, depending on the zoning, density and environmental concerns.

Once these lots are ready-to-go, they sell briskly, since housing starts in the region have increased for 16 consecutive quarters.

Year over year, lot deliveries in the second quarter were up 88 percent, to 2,206, according to Metrostudy’s report.

Cobb said there is plenty of undeveloped land in Southwest Florida that could be converted into lots — about 20,000 in Collier and 30,000 in Lee — and “more could be considered.” (The average lot is about 50 feet wide and 120 feet deep, he said.)

In Lee County, most of the available land is in the eastern and northern part of the county, especially in Lehigh Acres and Labelle, but is relatively scarce in the south.

Collier County’s growth corridor is in the east and south, particularly along U.S. 41 and Collier Boulevard, Cobb said.

But while there may still be abundant land that can be developed in the region, in the short run, builders and developers are feeling the pinch.

Naples real estate broker Bill Poteet said builders are “gobbling up” finished lots in the western portion of the county, so now many are looking east at raw land.

One 122-acre farm he listed just east of Collier Boulevard and north of U.S. 41 has garnered interest from potential buyers as far away as Nebraska.

And the seller is so confident it will sell, he turned down a full-price offer of $6 million because it had too many contingencies, Poteet said.

The town of Ave Maria, a 36-mile drive from downtown Naples, also is benefiting from the search for land.

Ave Maria Development recently has been approached by several national and local builders, said spokeswoman Andrea McLendon, since it has entitlements for up to 11,000 residences — and only 900 have been built by the builders currently selling there: Pulte Homes, Del Webb Naples and CC Homes.

Ken Thirtyacre, division president at Toll Brothers in Bonita Springs, said that “there’s absolutely a shortage of land in Southwest Florida,” especially since he’s looking for large raw parcels that can be converted into at least 50 lots.

“We have to get creative,” he said, adding he’ll sometimes try to get commercial land rezoned residential to get the acreage he needs.

But scarcity and creativity comes at a price, and higher land prices have forced him to raise home prices, Thirtyacre said.

That’s not unusual, said Cobb, explaining that land prices typically comprise about 20 percent to 30 percent of a home’s price — and is a big reason that prices in the region have skyrocketed.

Bill Bullock, senior vice president of Minto Communities in Naples, said his company has amassed a 15-year supply of land throughout Florida, much of it bought during housing’s lean years.

He questions whether builders who are acquiring land now at premium prices are paying too much, especially since he thinks the housing market may soon lose steam.

Real estate, he said, “is a cycle — and anyone who doesn’t think so is kidding himself.”

While land is still in great demand, Fort Myers real estate appraiser Matt Simmons noted that the rate of increase of lot prices in Collier and Lee counties is slowing.

Over the past 12 months, lot prices have increased about 10 percent to 12 percent in the region, he said, compared to 20 percent to 25 percent two years ago.

The slower rate of appreciation is healthy, Simmons stressed, because it ultimately will prevent home prices from soaring so high, a bubble forms and pops.

“We all saw what happened when the market crashed and burned, and no one wants to revisit it,” he said.