New Study Finds Land Shortage in the Twin Cities Area

Builder's Association of the Twin Cities Cites Shortage as Key Factor in

Skyrocketing Housing Costs



Nov 15, 2000, 00:00 ET from Builders Association of the Twin Cities

    ROSEVILLE, Minn., Nov. 15 /PRNewswire/ -- Far less land than previously
 believed is available for building new homes and commercial developments in
 the metropolitan area, according to a new study by the Builders Association of
 the Twin Cities (BATC).
     "This is creating a problem for people across the economic spectrum," said
 Todd Bjersted, president of BATC.  "Land shortages are causing lot prices to
 go through the roof, which is primarily why housing costs are going out of
 control.  Just five years ago, the National Association of Homebuilders ranked
 the Twin Cities the fifth-most affordable housing market in the country.
 Today, we've dropped all the way to 51st."
     BATC's study is a detailed land analysis of 23 suburban communities.  The
 study found that at most half -- and, due to other development constraints
 such as buried easements, very poor soils, shallow bedrock, environment
 pollution, problematic shape, poor access, proximity to highly undesirable and
 unsightly land uses and similar problems, maybe as little as a quarter -- of
 the 97,000 acres of land within the Metropolitan Urban Services Area (MUSA)
 identified as vacant/agricultural is actually available for development.
     BATC leaders say the finding of a buildable land shortage helps explain
 why housing costs -- of which land is the fastest-rising component -- are
 soaring out of reach of thousands of middle-income families, as well as those
 with lower incomes.  The cost of housing at all levels is going up three times
 faster than income or inflation.
     "It's been a rule of thumb here for a long time in the building and home
 finance industry that land is 20 to 35 percent of housing costs," said BATC
 President Todd Bjersted.  Many lots today are priced at $10,000 to $20,000
 more than they were even two years ago, which means the new house will cost
 $35,000 to $100,000 more.
     "This is in effect pricing many families out of the housing market.
 Economists have estimated that every $1,000 increase in a lot price drives
 away 3,400 families."
     BATC is calling on the Met Council and suburban cities, who exercise
 ultimate control over land made available by approving sewer line extensions
 and other requirements for building, to work with the builders to increase the
 land available so that more reasonably priced homes can be built.
     State and national guidelines suggest a 20-year supply of land essentially
 available for building as a way of striking a balance between supply and
 demand.  But the new BATC analysis of land parcels in 23 communities,
 including about 50,000 acres of the 97,000 identified by the Metropolitan
 Council as vacant/agricultural, found only about 43 percent or about 21,500 of
 those acres is genuinely buildable.  Given other constraints mentioned above,
 there may be as little as a five-year land supply within the MUSA.
     "The issue here, at least in the short term, is how we're going to
 maintain healthy economic growth in the region if people can't buy a home they
 like that's near their job," said Hans Hagen, a veteran home builder in the
 Twin Cities.  "We all know there's plenty of land out there that could
 accommodate the 15,000 new homes we're building every year.  The problem is,
 that land is effectively 'roped off' as a result of regional and local
 policies that restrict new building and force it to leapfrog to the remote
 edges of the metro area.
     "Since two-thirds of these new households are people from this area, we're
 effectively posting a sign telling our own children, parents and friends to
 'go away.'  It's hard for me to believe people want that to happen."
 
     The Study
     The BATC analysis was performed under the direction of John Shardlow, a
 principal in the land use planning firm Dahlgren, Shardlow, and Uban of
 Minneapolis.  It was intended both as an update to BATC's 1996 study, The High
 Cost of Sprawl, and as a response to the Met Council's report last summer that
 the vacant land inventory in the MUSA was greater than commonly believed,
 97,000 acres.
     The BATC analysis utilized Geographic Information Systems (GIS) maps, Met
 Council maps and data to create individual community maps for each of 23 key
 developing communities, ranging from Andover in the northwestern suburbs to
 Savage, Farmington, Woodbury, Blaine and cities in between.  Copies of these
 maps were sent to each community, along with a questionnaire.  Personal
 meetings to review and correct the maps were then held with planning staff in
 each community, and with knowledgeable local developers.
     As a secondary focus, the study began to map significant natural
 resources, existing development patterns and other factors that will limit and
 direct the development of the urban reserve.  The study also analyzed
 development status and potential of 45 cities outside the MUSA.  Some of these
 cities are in the seven-county metro area, but most are located within a
 broader 16-county region, extending into western Wisconsin.
     The 50,000 acres defined as vacant/agricultural and examined in the main
 part of the study were in communities on the perimeter of the MUSA, a line
 inside which public planning agencies encourage urban development.  The study
 found that much of the land is scattered and fragmented and highly undesirable
 due to natural and man-made factors such as poor soil, shape, steep slopes,
 poor access, proximity to undesirable land uses, and buried easements.  A
 significant amount of "vacant" land is actually part of an adjacent business
 or the back halves of platted residential lots that are unlikely to be opened
 to building.
     Altogether, the study identified approximately 21,500 acres as potentially
 available for development, though even that overstates the total somewhat
 because it still hasn't eliminated all of the railroad rights of way, local
 streets and back portions of some platted lots that were included in the
 Metropolitan Council's data.  Moreover, as a general rule only about half of
 land potentially available for building is developed as residential; the rest
 is commercial industrial, set aside for parks and recreation or otherwise not
 built upon.
 
     Recommendations
     "The implications of this analysis are clear," said BATC President
 Bjersted.  "We need to have more accurate data on which to base important
 decisions about how and where our region can grow.  There are ways to make
 more land available, such as extending the MUSA line outward and seeing to it
 that utilities are extended or staged appropriately so that needed growth can
 occur.
     "The alternative -- skyrocketing land prices that block orderly
 development and force people to move to the far fringes of the metro area in
 order to able to find a home they can afford -- is unacceptable."
 
 

SOURCE Builders Association of the Twin Cities
    ROSEVILLE, Minn., Nov. 15 /PRNewswire/ -- Far less land than previously
 believed is available for building new homes and commercial developments in
 the metropolitan area, according to a new study by the Builders Association of
 the Twin Cities (BATC).
     "This is creating a problem for people across the economic spectrum," said
 Todd Bjersted, president of BATC.  "Land shortages are causing lot prices to
 go through the roof, which is primarily why housing costs are going out of
 control.  Just five years ago, the National Association of Homebuilders ranked
 the Twin Cities the fifth-most affordable housing market in the country.
 Today, we've dropped all the way to 51st."
     BATC's study is a detailed land analysis of 23 suburban communities.  The
 study found that at most half -- and, due to other development constraints
 such as buried easements, very poor soils, shallow bedrock, environment
 pollution, problematic shape, poor access, proximity to highly undesirable and
 unsightly land uses and similar problems, maybe as little as a quarter -- of
 the 97,000 acres of land within the Metropolitan Urban Services Area (MUSA)
 identified as vacant/agricultural is actually available for development.
     BATC leaders say the finding of a buildable land shortage helps explain
 why housing costs -- of which land is the fastest-rising component -- are
 soaring out of reach of thousands of middle-income families, as well as those
 with lower incomes.  The cost of housing at all levels is going up three times
 faster than income or inflation.
     "It's been a rule of thumb here for a long time in the building and home
 finance industry that land is 20 to 35 percent of housing costs," said BATC
 President Todd Bjersted.  Many lots today are priced at $10,000 to $20,000
 more than they were even two years ago, which means the new house will cost
 $35,000 to $100,000 more.
     "This is in effect pricing many families out of the housing market.
 Economists have estimated that every $1,000 increase in a lot price drives
 away 3,400 families."
     BATC is calling on the Met Council and suburban cities, who exercise
 ultimate control over land made available by approving sewer line extensions
 and other requirements for building, to work with the builders to increase the
 land available so that more reasonably priced homes can be built.
     State and national guidelines suggest a 20-year supply of land essentially
 available for building as a way of striking a balance between supply and
 demand.  But the new BATC analysis of land parcels in 23 communities,
 including about 50,000 acres of the 97,000 identified by the Metropolitan
 Council as vacant/agricultural, found only about 43 percent or about 21,500 of
 those acres is genuinely buildable.  Given other constraints mentioned above,
 there may be as little as a five-year land supply within the MUSA.
     "The issue here, at least in the short term, is how we're going to
 maintain healthy economic growth in the region if people can't buy a home they
 like that's near their job," said Hans Hagen, a veteran home builder in the
 Twin Cities.  "We all know there's plenty of land out there that could
 accommodate the 15,000 new homes we're building every year.  The problem is,
 that land is effectively 'roped off' as a result of regional and local
 policies that restrict new building and force it to leapfrog to the remote
 edges of the metro area.
     "Since two-thirds of these new households are people from this area, we're
 effectively posting a sign telling our own children, parents and friends to
 'go away.'  It's hard for me to believe people want that to happen."
 
     The Study
     The BATC analysis was performed under the direction of John Shardlow, a
 principal in the land use planning firm Dahlgren, Shardlow, and Uban of
 Minneapolis.  It was intended both as an update to BATC's 1996 study, The High
 Cost of Sprawl, and as a response to the Met Council's report last summer that
 the vacant land inventory in the MUSA was greater than commonly believed,
 97,000 acres.
     The BATC analysis utilized Geographic Information Systems (GIS) maps, Met
 Council maps and data to create individual community maps for each of 23 key
 developing communities, ranging from Andover in the northwestern suburbs to
 Savage, Farmington, Woodbury, Blaine and cities in between.  Copies of these
 maps were sent to each community, along with a questionnaire.  Personal
 meetings to review and correct the maps were then held with planning staff in
 each community, and with knowledgeable local developers.
     As a secondary focus, the study began to map significant natural
 resources, existing development patterns and other factors that will limit and
 direct the development of the urban reserve.  The study also analyzed
 development status and potential of 45 cities outside the MUSA.  Some of these
 cities are in the seven-county metro area, but most are located within a
 broader 16-county region, extending into western Wisconsin.
     The 50,000 acres defined as vacant/agricultural and examined in the main
 part of the study were in communities on the perimeter of the MUSA, a line
 inside which public planning agencies encourage urban development.  The study
 found that much of the land is scattered and fragmented and highly undesirable
 due to natural and man-made factors such as poor soil, shape, steep slopes,
 poor access, proximity to undesirable land uses, and buried easements.  A
 significant amount of "vacant" land is actually part of an adjacent business
 or the back halves of platted residential lots that are unlikely to be opened
 to building.
     Altogether, the study identified approximately 21,500 acres as potentially
 available for development, though even that overstates the total somewhat
 because it still hasn't eliminated all of the railroad rights of way, local
 streets and back portions of some platted lots that were included in the
 Metropolitan Council's data.  Moreover, as a general rule only about half of
 land potentially available for building is developed as residential; the rest
 is commercial industrial, set aside for parks and recreation or otherwise not
 built upon.
 
     Recommendations
     "The implications of this analysis are clear," said BATC President
 Bjersted.  "We need to have more accurate data on which to base important
 decisions about how and where our region can grow.  There are ways to make
 more land available, such as extending the MUSA line outward and seeing to it
 that utilities are extended or staged appropriately so that needed growth can
 occur.
     "The alternative -- skyrocketing land prices that block orderly
 development and force people to move to the far fringes of the metro area in
 order to able to find a home they can afford -- is unacceptable."
 
 SOURCE  Builders Association of the Twin Cities