Land Subdivision
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 4,600 land subdivision firms in the US purchase and prepare property for division into multiple lots and subsequent sale to builders for residential, commercial, or industrial use. They typically develop property that they own, but may also subdivide and prepare sites for other property owners. About 66% of land subdivision firms have no employees. They rely on subcontractors to perform all services in preparing land for development.
Complying with Government Regulation
Land subdivision firms must comply with a wide range of federal, state, and local regulations governing land development.
Local Opposition To Development
Concerns over rampant growth or changes to existing neighborhoods can lead to opposition to new land subdivision projects.
Industry size & Structure
The average land subdivision firm with employees has about 8 workers and generates about $2 million in annual revenue.
- The land subdivision industry consists of 4,600 firms with 38,500 employees and generate about $10.7 billion annually.
- The average single operator (non-employer) firm generates $176,000 in annual revenue.
- Single operator firms rely on subcontractors to perform all services in preparing land for development.
- About 79% of firms with employees have less than 5 employees. Only about 74 firms have over 100 employees.
- The largest states for land subdivision are Texas, California, and Florida.
Industry Forecast
Land Subdivision Industry Growth
Recent Developments
Sep 10, 2024 - Single-Family Home Sales Rise
- New single-family home sales rose 10.6% month-over-month and were up 5.9% year-over-year in July 2024, according to the US Department of Commerce. July’s rise in home sales marked the biggest gain in more than a year as interest rates moved lower. For the week ending September 5, the average fixed-rate 30-year mortgage rate was 6.35%, down from 7.12% a year earlier. Housing industry observers expect mortgage rates to continue trending downward amid anticipated interest rate cuts by the Federal Reserve, according to Reuters. However, high home prices remain an obstacle for many would-be buyers. The median new home sales price in July 2024 was $429,800, up 3.1% from June but down 1.4 compared to July 2023.
- High interest rates have increased the costs for new multifamily construction and reduced property values, prompting some developers to halt or delay projects, according to The Wall Street Journal. Multifamily housing starts involving five or more units fell 21.8% in July compared to July 2023 and were down 41% from their April 2022 peak. The drop in starts follows a boom in apartment building that began during the pandemic. This year, about 610,000 apartment units are expected to come online, the most in any year since the 1980s, according to data firm CoStar. However, as financing new projects has become costlier, CoStar expects new apartment supplies to slip to fewer than 350,000 units in 2025 and 275,000 in 2026. The influx of new apartment building has created an oversupply in some regions, leading to lower property values and weak rent growth, which has reduced developer and investor appetite for new projects.
- In the second quarter of 2024, there were about 23,000 single-family built-for-rent (SFBFR) housing starts in the US, up nearly 10% from the same period in 2023, according to National Association of Home Builders analysis of US Census Bureau data. During the four most recent quarters, 83,000 SFBFR homes began construction, which is up more than 20% compared to how many were built in the previous four-quarter period. While the historical four-quarter moving average market share for SFBFR is about 2.7% (1992-2012), SFBFR’s current share of the overall single-family market is about 8%. Single-family built-for-rent homes provide an alternative for consumers who want more space but are challenged by a lack of affordable housing inventory and downpayment requirements in the for-sale market.
- A trend in smaller lot sizes for single-family detached homes has accelerated in recent years, according to the latest Survey of Construction by the US Census Bureau. Even as more families decamped to suburban areas seeking more space during the pandemic, lot sizes have continued to shrink. In 2023, lot sizes of less than 0.16 acres (less than 7,000 square feet) accounted for 40% of new single-family home sales compared to 30% in 2011. The share of lots under 0.16 acres has risen two percentage points since the pandemic began. Shrinking lot sizes suggest that firms that build homes speculatively have reduced lot and home sizes to cope with lot shortages and to offer more affordable homes as housing costs have risen.
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