The U.S. Is Running Short of Land for Housing
Land-use restrictions and lack of infrastructure have made it harder for developers to find sites to build homes; ‘almost across the board, you’re fighting for land’
Land-use restrictions and lack of infrastructure have made it harder for developers to find sites to build homes; ‘almost across the board, you’re fighting for land’
In the Sunbelt, the hottest commodity isn’t oil, copper or gold. It is land. And rancher Robert Thomas has plenty of it.
Mr. Thomas’s family owns about 11,000 acres of ranchland northeast of Tampa, Fla. His grandfather, who owned newspapers and ran a minerals-exploration business, bought much of it for 10 cents an acre in 1932. Since then, the population of the Tampa metropolitan area has exploded to more than 3 million. The Thomas family’s ranch is now surrounded by communities of single-family homes.
Home builders, hungry for land, have offered to buy Mr. Thomas’s land. The family sold part of its holdings last year to a developer for about $70 million, or about $20,000 per acre, according to property records. Developers are now offering more than twice as much for some of his remaining land, Mr. Thomas said.
Tampa-area land prices are “booming right now like nothing I’ve ever seen,” he said. “And I’ve been in charge here for 44 years.”
The United States, a country of wide open spaces, is short on land.
Or at least land where people can live. Land-use restrictions and a lack of public investment in roads, rail and other infrastructure have made it harder than ever for developers to find sites near big population centres to build homes. As people keep moving to cities such as Austin, Phoenix and Tampa, they are pushing up the price of dirt and making the housing shortages in these fast-growing areas even worse.
In the Sunbelt, the average price of vacant land per acre more than doubled in the past two years through the second quarter, according to Land.com, a land-listing website owned by real-estate firm CoStar Group.
The Federal Reserve’s efforts to fight inflation might bring prices down. Higher interest rates and construction costs are already weighing on the land market, brokers say, and other parts of the real-estate market are starting to slow. While land prices haven’t fallen, there are fewer bidders on deals. Some landowners worry about a downturn similar to the 2008 financial crisis, when home and land values plummeted after years of debt-fuelled excess.
Still, the lack of supply and the strong demand mean land prices will likely continue to rise in the long term, economists and investors say.
Even in cities such as New York and San Francisco, where populations shrank during the pandemic, land is far more expensive today than it was decades ago. U.S. residential land alone is now estimated to be worth more than $20 trillion, according to Morris Davis, a professor of finance at Rutgers Business School who studies land values.
This historic land boom has provided a windfall for homeowners. Land now accounts for 47% of U.S. home values, estimates Mr. Davis. That is up from 38% in 2012 and less than 20% in the early 1960s. The rising value of land is responsible for almost all of the surge in home values in recent decades, he said.
Few places have seen land values rise more sharply than Tampa’s exurbs. When Mr. Thomas’s grandfather bought the family ranch during the Great Depression, he was the only bidder. “It didn’t have a tree big enough for a bird to build a nest in,” Mr. Thomas, 66, said. “It was just a chunk of sand in a godforsaken wilderness in Florida.”
According to family lore, the bank that oversaw the ranch on behalf of an estate was so desperate to get rid of it that a banker urged Mr. Thomas’s reluctant grandfather to make an offer. “He said 10 cents an acre, and the banker slammed his fist on his desk and said ‘sold! You could have had it for a nickel,’ ” Mr. Thomas said.
Even after factoring in another $5 an acre in back taxes owed on the land, it was still a bargain, Mr. Thomas said.
Over the years, the family bought additional land around the ranch. Today, much of the property is densely forested. Cows laze in the shade of moss-covered oak trees while white-tailed deer pass through the bushes.
Increasingly, it is a green oasis surrounded by construction sites. As Mr. Thomas drove down a road near his ranch in his pickup truck on a recent Thursday, he could see dozens of two-story homes rising in neat rows. “You can reach out your window and tap on your neighbour’s window,” he said.
Asking prices for homes in these new communities go as high as $900,000, in part because the land underneath is so valuable. That has a lot to do with land-use regulations.
Tampa’s zoning rules prevent developers from building anything larger than a single-family home in much of the city. When officials for Hillsborough County, which includes Tampa, adopted zoning regulations in 1950, they said the measures were necessary to prevent overcrowding and traffic jams and would preserve the neighbourhood character, all “with a view to conserving the value of buildings,” according to the regulations.
Not only did these restrictions help maintain home values, they boosted the price of developable land. Because developers can’t stack homes on top of each other, they need more land for each housing unit. That is driving demand for land, pushing up prices.
It is also forcing builders to look for lots farther away from the city, where they run into new restrictions. Hillsborough County in late 2019 put a moratorium on the rezoning of land for housing in some areas in a bid to rein in new development. The move followed antidevelopment protests from residents who said local infrastructure couldn’t keep up with the region’s growth.
Pasco County, to the city’s north, in 2021 also put a moratorium on rezoning to multifamily use in some areas.
Between early 2021 and early 2022, home prices in the Tampa metropolitan area rose by 35%, according to the S&P CoreLogic Case-Shiller Index, the fastest increase of any of the 20 metro areas tracked.
Because much of the Thomas land, which is only a half-hour drive from downtown Tampa, is already zoned for housing, it is in high demand. Builders are competing for a piece of it. “I get letters, I get emails, I get calls,” Mr. Thomas said. “Somehow people got my cellphone number.”
Since 1932, the value of the Thomas family’s land, adjusted for inflation, has increased almost 200-fold, based on the price of last year’s sale. That is about 10 times the inflation-adjusted growth of the S&P 500 stock market index, which increased about 20-fold during that period.
Inadequate infrastructure is also boosting land inflation. In Nashville, for example, commutes have been getting longer as the population grows and traffic jams worsen, U.S. census data shows. A lack of public transit means commuters often have little choice but to inch down clogged roads. In 2018, voters rejected a proposal to build a light-rail system and expand bus service. That is putting a premium on scarce land close to the city centre.
Lisa Maki, a principal at commercial real-estate brokerage Avison Young in Nashville, said her team last year arranged the sale of two lots in the city’s booming Gulch neighbourhood to a real-estate investment firm for $7.1 million. The seller, a family from California, had bought the properties for $1.1 million in 2011.
The number of vacant lots zoned for residential use in Nashville fell by 43.5% between 2016 and 2021, according to an analysis of public property records by real-estate data, technology and services firm Altus Group for The Wall Street Journal.
A shortage of development sites and surging land prices, plus high construction costs, mean developers haven’t been able to build enough housing to keep up with demand. Apartment asking rents in Nashville rose 31% in the year ending in June, according to real-estate brokerage Redfin. The same phenomenon is playing out across the Sunbelt.
Five years ago, building apartments in the hottest Sunbelt markets was pretty easy, said Ryan Williams, executive chairman of real-estate investment firm Cadre.
“Now, almost across the board, you’re fighting for land,” he said. Bidding wars for vacant sites in cities such as Atlanta and Austin are common. Cadre recently looked at a lot in Tampa but didn’t have time to get a bid in because another investor snapped it up without even visiting it, he said.
Increasingly, the company competes not just against other developers, but also against investors looking to buy lots and flip them for a profit or keep them unused, he said. “It’s a literal land grab,” Mr. Williams said.
Wealthy investors, including billionaire distiller Tito Beveridge and golfer Phil Mickelson, have started buying up land in the Sunbelt in recent years. Some investors keep land vacant for years, betting values will keep rising and taking advantage of favourable tax treatment for undeveloped land.
Land wasn’t always so expensive. Until the second half of the 20th century, America’s population was far more spread out, living where land was cheap. But as more people moved to a small number of cities with abundant office jobs, and municipalities passed stricter zoning codes that made it tougher to build housing, land prices and housing costs surged.
Land values in Manhattan barely increased between the 1880s and 1970s after adjusting for inflation, according to calculations by Jason Barr, an economist at Rutgers University-Newark. But between 1977 and 2019, they grew at an average annual rate of about 13%.
Most economists say municipalities need to relax zoning rules and other restrictions to bring down land inflation and build more housing. But these changes are often unpopular with homeowners, who benefit from rising land values and make up around 65% of U.S. households. Adding more housing also often requires costly investments in roads and other infrastructure.
People are still moving to Sunbelt cities, and zoning restrictions are unlikely to disappear soon. Remote work has given Americans more choice, but economists say most young professionals continue to flock to a small number of cities. Some think the Sunbelt could see the same kind of stubborn land inflation that has haunted New York and San Francisco for decades and made them among the country’s least-affordable cities.
Once land inflation sets in, it can be hard to reverse. Landowners who think their property will become more valuable have little incentive to sell today, making it even harder for developers to find sites.
Mr. Thomas said his family has decided to keep its remaining land. Thanks to agricultural exemptions, his property taxes are low. The many offers he’s recently received are tempting, he said, but if he sells, he would have to find a place to put his new money.
“What are you going to do with what’s left that’s a better investment than just continuing to own the land?” he said.
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At the World Plogging Championship, contestants have lugged in tires, TVs and at least one Neapolitan coffee maker
GENOA, Italy—Renato Zanelli crossed the finish line with a rusty iron hanging from his neck while pulling 140 pounds of trash on an improvised sled fashioned from a slab of plastic waste.
Zanelli, a retired IT specialist, flashed a tired smile, but he suspected his garbage haul wouldn’t be enough to defend his title as world champion of plogging—a sport that combines running with trash collecting.
A rival had just finished the race with a chair around his neck and dragging three tires, a television and four sacks of trash. Another crossed the line with muscles bulging, towing a large refrigerator. But the strongest challenger was Manuel Jesus Ortega Garcia, a Spanish plumber who arrived at the finish pulling a fridge, a dishwasher, a propane gas tank, a fire extinguisher and a host of other odds and ends.
“The competition is intense this year,” said Zanelli. Now 71, he used his fitness and knack for finding trash to compete against athletes half his age. “I’m here to help the environment, but I also want to win.”
Italy, a land of beauty, is also a land of uncollected trash. The country struggles with chronic littering, inefficient garbage collection in many cities, and illegal dumping in the countryside of everything from washing machines to construction waste. Rome has become an emblem of Italy’s inability to fix its trash problem.
So it was fitting that at the recent World Plogging Championship more than 70 athletes from 16 countries tested their talents in this northern Italian city. During the six hours of the race, contestants collect points by racking up miles and vertical distance, and by carrying as much trash across the finish line as they can. Trash gets scored based on its weight and environmental impact. Batteries and electronic equipment earn the most points.
A mobile app ensures runners stay within the race’s permitted area, approximately 12 square miles. Athletes have to pass through checkpoints in the rugged, hilly park. They are issued gloves and four plastic bags to fill with garbage, and are also allowed to carry up to three bulky finds, such as tires or TVs.
Genoa, a gritty industrial port city in the country’s mountainous northwest, has a trash problem that gets worse the further one gets away from its relatively clean historic core. The park that hosted the plogging championship has long been plagued by garbage big and small.
“It’s ironic to have the World Plogging Championship in a country that’s not always as clean as it could be. But maybe it will help bring awareness and things will improve,” said Francesco Carcioffo, chief executive of Acea Pinerolese Industriale, an energy and recycling company that’s been involved in sponsoring and organizing the race since its first edition in 2021. All three world championships so far have been held in Italy.
Events that combine running and trash-collecting go back to at least 2010. The sport gained traction about seven years ago when a Swede, Erik Ahlström, coined the name plogging, a mashup of plocka upp, Swedish for “pick up,” and jogging.
“If you don’t have a catchy name you might as well not exist,” said Roberto Cavallo, an Italian environmental consultant and longtime plogger, who is on the world championship organizing committee together with Ahlström.
Saturday’s event brought together a mix of wiry trail runners and environmental activists, some of whom looked less like elite athletes.
“We like plogging because it makes us feel a little less guilty about the way things are going with the environment,” said Elena Canuto, 29, as she warmed up before the start. She came in first in the women’s ranking two years ago. “This year I’m taking it a bit easier because I’m three months pregnant.”
Around two-thirds of the contestants were Italians. The rest came from other European countries, as well as Japan, Argentina, Uruguay, Mexico, Algeria, Ghana and Senegal.
“I hope to win so people in Senegal get enthusiastic about plogging,” said Issa Ba, a 30-year-old Senegalese-born factory worker who has lived in Italy for eight years.
“Three, two, one, go,” Cavallo shouted over a loudspeaker, and the athletes sprinted off in different directions. Some stopped 20 yards from the starting line to collect their first trash. Others took off to be the first to exploit richer pickings on wooded hilltops, where batteries and home appliances lay waiting.
As the hours went by, the athletes crisscrossed trails and roads, their bags became heavier. They tagged their bulky items and left them at roadsides for later collection. Contestants gathered at refreshment points, discussing what they had found as they fueled up on cookies and juice. Some contestants had brought their own reusable cups.
With 30 minutes left in the race, athletes were gathering so much trash that the organisers decided to tweak the rules: in addition to their four plastic bags, contestants could carry six bulky objects over the finish line rather than three.
“I know it’s like changing the rules halfway through a game of Monopoly, but I know I can rely on your comprehension,” Cavallo announced over the PA as the athletes braced for their final push to the finish line.
The rule change meant some contestants could almost double the weight of their trash, but others smelled a rat.
“That’s fantastic that people found so much stuff, but it’s not really fair to change the rules at the last minute,” said Paul Waye, a Dutch plogging evangelist who had passed up on some bulky trash because of the three-item rule.
Senegal will have to wait at least a year to have a plogging champion. Two hours after the end of Saturday’s race, Ba still hadn’t arrived at the finish line.
“My phone ran out of battery and I got lost,” Ba said later at the awards ceremony. “I’ll be back next year, but with a better phone.”
The race went better for Canuto. She used an abandoned shopping cart to wheel in her loot. It included a baby stroller, which the mother-to-be took as a good omen. Her total haul weighed a relatively modest 100 pounds, but was heavy on electronic equipment, which was enough for her to score her second triumph.
“I don’t know if I’ll be back next year to defend my title. The baby will be six or seven months old,” she said.
In the men’s ranking, Ortega, the Spanish plumber, brought in 310 pounds of waste, racked up more than 16 miles and climbed 7,300 feet to run away with the title.
Zanelli, the defending champion, didn’t make it onto the podium. He said he would take solace from the nearly new Neapolitan coffee maker he found during the first championship two years ago. “I’ll always have my victory and the coffee maker, which I polished and now display in my home,” he said.
Contestants collected more than 6,600 pounds of trash. The haul included fridges, bikes, dozens of tires, baby seats, mattresses, lead pipes, stoves, chairs, TVs, 1980s-era boomboxes with cassettes still inside, motorcycle helmets, electric fans, traffic cones, air rifles, a toilet and a soccer goal.
“This park hasn’t been this clean since the 15 century,” said Genoa’s ambassador for sport, Roberto Giordano.
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