The Charleston region doesn't just have a lack of available houses on the market for the influx of new residents coming for jobs and retirement, it's also facing a shortage of developed lots.
Over the next five years, the region will need to develop 28,950 lots to keep up with growth, according to Patrick Arnold, director of the Charleston Home Builders Association.
"That's not going to be met," Arnold said of the region's five-year needs. "That's going to be a terrible problem for us."
He believes about 70 percent of the lots needed will be construction-ready in five years. That means they will have water and sewer and other infrastructure in place before building begins.
Currently, the Charleston area offers about 9,000 developed lots.
The availability and cost of land and the length of time to gain government approval for new projects serve as barriers to providing build-ready lots for new homes, Arnold said.
"We can't make more dirt in the Lowcountry," he said.
The average cost of an entitled lot — one that has met the permitting requirements and is site-ready for a single-family home in the region — is between $40,000 and $45,000, according to Michael Scarafile, president of Carolina One Real Estate, the largest agency in the Charleston area.
That can range from about $15,000 along the U.S. Highway 52 corridor between Goose Creek and Moncks Corner in Berkeley County and the Ridgeville area of Dorchester County to well over $100,000 in Mount Pleasant, according to Will Jenkinson with Caroline One New Homes.
"Overall, we are more expensive in the Charleston area than other parts of the state," Jenkinson said. "The main reason is land cost. It's pricier in the region because of where we are located (along the coast)."
The price of homes in the Charleston area hasn't stopped climbing either.
The median price of a house in the region jumped 6 percent so far this year through July to $265,000, and the number of homes on the market dropped 13 percent to about 5,200 last month, down considerably from the 6,500 needed to keep supply and demand in check across the region.
Lots of red tape
Arnold is spot on about the lack of lots, said home builder Will Herring of Mount Pleasant-based Hunter Quinn Homes.
The shortage comes between acquiring land, engineering it and gaining permit approval.
"There is going to be a gap to get it developed," Herring said. "You have to plan several years out."
The permitting process presents one of the biggest challenges. Builders can't move forward until they have the blessing of regulatory agencies.
"We deal with several different municipalities, and each one has its own process," Herring said.
That's true at the local level, but some of the regulatory hoops are state mandated and are the same for each municipality, said Jacob Lindsey, director of the city of Charleston's planning department, the largest in the region.
Further delays can be encountered if agencies are stretched out on staffing and trying to meet the demands thrust upon the region by its economic success and influx of new residents.
"The development cycle could be sped up if the different government entities worked together and had a comprehensive set of guidelines," Herring said.
They do not, but Lindsey said Charleston tries to bring all of the city departments involved in a building project together at the same time with the developer to speed up the project.
"We have a consolidated review process where the property owners can get all the feedback in one place," he said.
Still, it can take several years to get large projects off the ground, and Herring foresees the shortage of places to build new homes as continuing to affect affordability.
"If there is not the availability of homes, it is going to push the price up," Herring said. "People are coming here whether we like it or not. We need to make sure they have somewhere to live when they get here."
Longtime local home builder Jeff Meyer of J. Meyer Homes agreed.
"It takes us about 2½ years to get through the approval process in general," Meyer said. "We have to get the wetlands delineated through the Army Corps (of Engineers), and we like to have that completed before we get too far into engineering. It can take some time to get through that process."
He also said home buyers don't like to buy raw land outright.
"Until we get a clearing permit, we don't know how long it will take to get through the approval process," Meyer said. "And we can't begin site work until all the government agency plans are approved."
Another possible holdup is a limit on infrastructure.
"Some neighborhoods require extension of water and sewer lines to serve the community," Meyer said. "And some communities are having discussions about growth boundaries or putting limitations on development."
That will further hamper the housing shortage problem, he said.
Talking it out
Communication is key to helping maneuver through the web of regulations and general lack of knowledge by different government entities of the development business, Meyer said.
"Input from the building community with the government bodies will alleviate that bottleneck," he said. "When we have good dialogue from government bodies and they understand how the development business works, we find solutions that work for everybody. That's when we start solving problems."
Lindsey emphasized there is no single answer to the length of time it takes to move a housing development project through the approval process.
"It completely depends on size, location and zoning," Lindsey said. "A small project of just a few houses can make its way through in as short as a couple of months, where a large project can take several years."
The land condition and the scope of the project are two major factors.
A complicated project can involve many departments other than planning. Public services gets involved for stormwater and engineering, and then there are considerations for fire service, transportation impacts and handicapped accessibility.
"Properties that are constrained take longer, too," he said.
"If it has more grand trees or is a brownfield site or has drainage complications, it will take longer to develop because each of those issues has to be addressed," Lindsey said.
Nevertheless, he said the city tries to shepherd developers through the regulatory maze with as few roadblocks as possible to getting a project up and running.
"We have a fairly efficient process," Lindsey said. "It all depends on what the owner wants to do."