photo by: Rochelle Valverde/Journal-World

A house under construction on a formerly vacant lot in the 2200 block of Learnard Avenue is pictured on Sept. 24, 2022.

Lawrence’s annual inventory of available residential lots does not bear good news, with the city now calculating that it will be completely out of developable land in only about three years.

That represents a notable decrease from the previous year, impacting the city’s affordable housing efforts as well as policy discussions regarding development and expansion of the city’s boundaries. The city calculates its residential lot inventory by looking at both how many lots are available and market demand. Because of a significant drop in the number of available lots from 2020 to 2021, that number has decreased from 5.8 years to 3.2 years in the span of only a year.

“That’s a big jump, a big change in one year, and I think highlights in the data something people have seen on the ground, which is inventory is tight and getting tighter,” City Commissioner Brad Finkeldei said.

Planning and Development Analyst Brandon Thorngate said that the residential lot inventory estimate is calculated by dividing the residential lot supply — the number of development-ready and potentially development-ready lots — by the lot demand, represented by the number of single-family building permits applied for that year. Thorngate said demand only changed slightly in 2021, and the biggest factor for the difference in estimated available inventory is the decrease in available supply. The number of available residential lots decreased from 753 as of Dec. 31, 2020, to 511 as of Dec. 31, 2021, or by 32%, according to the report.

Affordable Housing Administrator Lea Roselyn said that does not bode well for the city’s efforts to improve housing affordability and highlights the importance of the city’s upcoming update to its land development code.

“Scarcity drives up cost, and Lawrence has a scarcity of available residential lots,” Roselyn said in an email.

Thorngate said while a change in zoning could cause a lot to go from available to unavailable for residential development, he is not aware of that happening between the 2020 and 2021 reports, and the most likely reason for lots becoming unavailable is that they have been built on. The 511 residential lots include 408 lots in older subdivisions and 103 in newer subdivisions, with those numbers representing decreases of 17% and 61%, respectively.

Potential policy impacts

The inventory has generally been declining over the past several years, according to past city reports. In 2014, for example, the estimate for how long it would take to exhaust the residential lot inventory was 14 years. In 2019, it was six years.

Finkeldei, who previously served on the Planning Commission and is chair of the steering committee working to update the city’s land development code, said the fact that the lot inventory is dropping faster than previously anticipated could impact decisions regarding residential density as well as annexation of new land into the city. For instance, when it comes to annexation, he noted the comprehensive plan, Plan 2040, which took years to draft and was ultimately approved in 2019, was developed with the lot inventory known at the time. Plan 2040 established specific growth areas for the city within the timeframe of the plan, and requires that developers provide a community benefit — such as affordable housing or dedication of parkland — for annexations. Finkeldei said as the residential lot inventory declines, he thinks at some point just providing residential lots could count as providing a community benefit.

“I do think the reduction of available lots increases the idea that residential lots in and of itself is a community benefit when we have a shrinking supply,” Finkeldei said. “People can disagree with what that number should be and when it should be considered a community benefit, but I think going from 5.8 years of inventory to 3.2 certainly gets it closer to the line no matter how you’re looking at it.”

The Lawrence Home Builders Association has previously expressed concerns that the lot inventory overestimates the number of available lots. While the city began further evaluating lots in 2019 before designating them as available, association representatives have said some of the lots, though technically available, may still have other factors that prevent them from being developed, such as steepness or the owner having no plans to sell. Referencing those discussions, Finkeldei said it’s important to note that the report does not make those subjective judgments, and because of that the actual residential lot inventory is less than the 3.2-year estimate.

Affordable housing impacts

Roselyn said not only does the scarcity of lots drive up their costs, but the difficulty of identifying a lot is a main barrier housing developers experience in the Lawrence market.

“For example, I have been communicating with a developer interested in building affordable housing in Lawrence who has been looking for a parcel for over a year,” Roselyn said.

Roselyn said at one point the developer found a lot with good conditions for the project, but it turned out that the lot was zoned for single-family development. She said the lot inventory illustrates what the Lawrence Homebuilders Association and affordable housing developers have also communicated, which is that Lawrence doesn’t have enough developable lots available.

The city also consulted other measurements that point to a low supply of already-built housing units. A recent report by Up for Growth, a research group with the goal of eliminating housing shortages, shows that from 2017 to 2019, Lawrence’s housing needs were being met, but that conditions were getting worse. During that time, it was estimated that Lawrence only had 34 housing units in excess of the community need, which translates to a 0.1% housing surplus, according to a recent memo to the City Commission.

Roselyn said a key driver of the housing affordability crisis is the underproduction of new housing stock, which has not kept pace with population and buyer demand since the Great Recession and was further exacerbated by the pandemic.

“Fewer new homes were built in the decade following the Great Recession than in any decade since the 1960s, and since the pandemic the deficit has expanded even further,” she said.

Roselyn said two of the leading factors of underproduction are land availability and exclusionary zoning laws. She said to foster more housing production, the city’s Affordable Housing Advisory Board has generally recommended support of new annexation of land that includes affordable housing development options, and revisions to the land development code that ease restrictions such as minimum lot size, frontage, and single-family exclusionary zoning. In that way, Roselyn said the land development code update will be critical for housing affordability in Lawrence.

The city is in the process of updating its land development code, which will implement Plan 2040 and determine where and how the city grows. The steering committee recently met for the first time, and the process to update the code, which has not been updated since 2006, is expected to take two years.