Phil Nanula can’t believe how busy he’s been as a homebuilder.
His company, Essex Homes of Western New Yorkhas two housing developments underway in Amherst, one for patio homes and the other for single family homes.
Between them, it has 53 lots available for sale and construction. Yet he has received 135 “reservations” for these lots, nearly three times what is available.
And that’s a problem: homebuilders can’t keep up with demand, especially at a time when the existing home market is boiling, with homes hard to find and median prices up 15% the month before. last year.
The number of new houses being built locally has grown only at a moderate rate. Federal housing data shows municipalities in Erie and Niagara counties issued 978 building permits for new single-family homes last year.
That’s a 7% increase from 2020, but it’s about a third of the nearly 20% jump in building permits in New York and only about half of the 13.5% jump nationwide. nationally, according to Census Bureau data.
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It starts with nagging labor shortages. Hard-to-obtain supplies make the situation worse. And the unpredictable and often much higher prices of everything from lumber to appliances are an additional drag on construction.
Builders say demand isn’t the problem. Instead, it is the lack of available land that can be turned into building sites that is holding back construction, in addition to rising prices and supply shortages.
This is the key. Homebuilders must find enough land on which to build and then get approval from municipalities to do so. Supply chain issues and costs are also factors, but they’re irrelevant if the land isn’t there or the cities say no.
And that’s been a big issue here, due to tougher regulatory reviews and the difficulty in finding ready-made land or even land already ready for construction. A large number of properties also have significant wetlands or lack sewer capacity. And that limits where builders and buyers go and how long it takes to build.
“It’s a challenge to find the right piece, get it approved, and get it out there,” said Patrick A. Marrano, president and CEO of Marrano Homes.
New local construction would increase even more — “if we had land,” said David L. Capretto, president of Forbes-Capretto Homes.
“It’s really, really difficult,” he said. “There is a lot of demand, but it’s so difficult to get projects approved in the different municipalities here.”
Essex is working on a 29-lot patio home project in Amherst called Reserve at Pine Meadows off Dodge Road. It also has a single-family development around the corner, Fairwood Estates, with 24 lots. Nanula expects both to sell out within a year.
But construction was delayed as Essex had to wait for regulators to approve its homeowners association’s condominium status and a stormwater management plan. So he couldn’t begin to convert his plentiful bookings into deposits and contracts signed so far.
“We have to control the amount of interest we receive because we cannot respond to everyone in a timely manner,” Nanula said. “We had a period in the fall of last year where we suspended sales in a few neighborhoods just to catch up with the amount of interest we had booked.”
That’s good – and bad – for builders.
With such demand for its two Amherst projects, Essex was in a desirable position to easily sell the new developments.
But he was also in the unenviable position of having to choose the buyers best positioned to act immediately and close the deal.
“I’ve never seen this happen in my 30 years of work,” said Nanula, chairman of Essex, which also has developments underway in Orchard Park and Clarence.
He and Essex are not alone.
“The Loudest I Can Remember”
Now is a great time to sell an existing home in Western New York, with potential buyers outnumbering the record number of sellers.
But it’s also a boom time for homebuilders, with demand skyrocketing due to this severe shortage of existing homes for sale.
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“The demand has been very strong,” said Capretto, who has been in business for more than 30 years.
“It’s the strongest I can remember,” he said. “There aren’t many homes for sale, and that’s making people consider new builds.”
Marrano houses – which is part of Marrano/Marc Equity Corp. – had the most sales and closings in a year in its history and carried over the most deals through 2022. “We’re lucky to have some really good locations, and that helps a lot. And we already had a good January, so that speaks well for the market,” Marrano said.
“The market is incredibly hot,” Marrano said.
“It’s a good time to be a home builder,” he added. “It’s a good time to buy a house – if you can find what you want.”