Guy Asaro, president of McMillin Homes LLC, bought three land parcels in Texas this year while coming up empty in the San Diego area, where the closely held builder is based.
Ready-to-build lots around San Antonio, where McMillin has constructed houses since 2005, cost $55,000 to $70,000, or as little as one-sixth the going price in San Diego, Asaro said. He keeps searching in California, the most populous state, because a little land in the right place can yield a big return.
“In Texas, land is like lumber — something to build a house for somebody to live in,” Asaro said in a telephone interview. “In California, the land is what’s valuable. The house is just how you monetize it.”
The nascent recovery in new-home sales has U.S. builders rushing to buy up a diminishing supply of well-located, ready-for-construction land. They added more than 18,000 lots during their most recent quarter, the biggest gain since their inventory hit a nadir in the fourth quarter of 2009, according to data compiled by Bloomberg Industries. Demand is becoming so overheated in areas such as coastal California that developers are forced to pay more or shop in less-favorable markets.
Around the California coast, where the technology and health-care industries are fueling job gains, plots are selling faster than developers can prepare the dirt. The supply of finished lots — which have permits, streets and water and power lines, enabling construction — will fall to zero within a year in San Diego, Orange County and San Jose, said the Concord Group, a Newport Beach-based consulting firm.