A few weeks ago I received an email from the Wisconsin Realtors Association. The email asked that I, as a member, contact my representative in the state legislature and ask him or her to vote in favor of an upcoming bill. The bill was like all bills. Some good, some bad, lots of extras. But the primary crux of this bill is that it would make it easier for developers to develop land. The bill was aimed at “increasing the amount of housing inventory by reforming the residential real estate development process.” Since Realtors sell real estate, it was only fitting that the WRA pushed the passage of this bill. Realtors, never claiming to be a group that likes to question the management, likely went along with the initial request and contacted their local legislatures and urged them to vote yes.
When I read that initial email, I replied and told the sender that I would be asking my representatives to vote down this bill. The reply I then received asked me why. I asked a better question: How many vacant lots exist in the state of Wisconsin? How many future developments are already approved, with tidy re-zone requests granted, but have yet to begin construction? My questions were met with silence. And this is the problem with development in the state of Wisconsin.
The market today is healthy. There is a veritable construction boom around Lake Geneva, Walworth County, and elsewhere in this fine state of ours. FoxConn is brining jobs, Amazon is adding more, and Uline can’t seem to hire fast enough. The market is expanding, and with it, an increased demand for housing. Add in a hot re-sale market, which is usually the most under appreciated asset of any market rebound, and you’ve got some serious liquidity. Call a contractor in Lake Geneva today and ask him to come out and build you a deck. Wait a few months for him to show up. That’ll give you a taste of how active the construction trades are at this moment. All in all, it’s a fantastic thing.
Those in power at the state and municipal level see this growth and feel as though they must react to it. Let’s Make More Housing!, they cry. And they set to writing legislation to make it easier to develop land. After all, with all of these pesky zoning laws in place how can Joe Developer strip out a farm field to build 200 vinyl ranches? The legislators drive around their small home towns and see construction. They see cranes in the sky over Milwaukee. They see businesses moving from the North Suburbs of Chicago to those South Suburbs of Milwaukee. They see the demand and they want to feed it. They think they’re doing the right thing.
But they aren’t. Because what they’re all failing to realize is that this current building boom comes on the heels of a building bust. The vacant inventory that was created during the last boom (2000-2008) is still there. The platted but unbuilt developments might look like farm fields to the naked eye, but to the GIS Map they show their true identity. These are sleeping giants. Huge sections of residential development is ready to go, but yet it sits idle. Realtors and Legislators think the solution is to add more development on top of this old product. I say finish your plate before you ask for seconds.
Today there are 676 vacant lots listed for sale in Walworth County. There are likely at least two thousand more lots approved to be built on but remain in undeveloped subdivisions. That estimate is likely low. Last year there were 216 vacant lots sold in the county (per MLS). Long after the term Zombie Foreclosures left our lexicon, consider these the Zombie Developments of 2018. If we consider briefly that we have 2500 or so lots approved and ready for roads/shovels/permits, and we sold 216 lots during the strongest housing market in a decade, then we have roughly 12 years worth of inventory ready for construction. Is that not enough? To the developers and their minions on county and township boards, are you not entertained?
Yes, the housing market today is vibrant. Yes, the near future looks just as bright. But markets never expand forever. What happens when the current round of zoning changes are finalized and we add another thousand or more lots to the Walworth County plat map, and that additional inventory coincides with an inevitable future market downturn? What happens to Joe Homeowner in his $199k cornfield ranch then? I remain firm in my opposition to large scale redevelopment of vacant land not because I hate development, but because of whose side I’m on. In the battle between the existing homeowner who would love to add a few percent of appreciation to his house every year and the developer who wishes to flood a market with product for people that may or may not some day move there, I choose to root for the current homeowner every. single. time.