The Gazette has a very interesting article today: Real estate bust like 1980s is unlikely to be repeated.

While the headline is poor and there's the usual denial by local "experts", this really is a fascinating and eye-opening piece by Ed Kemmick. The sub-title says it best: Less than one-third of lots platted between 2005 and 2008 have houses on them.


Bitterroot Heights has only 5 of its 50 lots built out.

Look at the link and you'll see a map with dozens of subdivisions that have popped up since 2005. This article also has a table with some very useful-- and stunning-- data about how vacant many recent subdivisions are. There are lots of vacant lots, 2164 to be exact.

But I think it's even more interesting to go one step further and see how the construction decline works in with all these empty lots. Here are my calculations:



That's right. If no more subdivisions are platted and construction continues as it's going so far this year, it will take 13 years to build on all the empty lots. Not only do we have massive housing oversupply, we have massive lot oversupply as well.

Of the people quoted, Howard Sumner has two of the more interesting points in this article: 1) Developers take a substantial risk, and can lose big if less than 2/3 of their lots sell. 2) Large portions of empty subdivisions may have already been sold to other people who may hang on to them as an "investment."

That last point is particularly interesting. There are probably many people holding on to lots as "investment" -- I would call them speculators. Empty land values are subject to wilder fluctuations than houses are, and with such a huge supply I think lot prices have to come tumbling down. The only question is: Who will the bagholders be? Will we see local bank trouble out of this?

Finally, I must address this amazing quote:

..real estate agent Twyla Best said the No. 1 factor influencing the local market is national media coverage of housing foreclosures.

Excuse me? National media are crashing our market? Not the fact that we built too many houses? Not the fact that houses are overpriced? Not the fact that we had a decade-long housing boom and all booms go bust?

If your county has a 13-year supply of lots and you're blaming the media for a bad market-- I just don't know what to say! This bust has been in the works for years. Careful observers caught on. The rest appear to be caught off guard, and most are still in denial. Reality can be hard to face.