Just as the new-home construction sector appears to be strengthening, some homebuilders here worry that they'll face a shortage of land to build on in coming years, when a recession-related bottleneck in lot development could constrict market recovery, sources say.

In each of the last four years—and in six of the last 10 years—the number of building permits issued throughout Spokane County for single-family homes has exceeded the number of lots created, says the most recent edition of The Real Estate Report, published by the Spokane-Kootenai Real Estate Research Committee.

"There's no question that there just hasn't been significant platting activity or land development of new lots occuring in roughly five years," says Jim Frank, CEO of Greenstone Corp., the prominent Liberty Lake-based real estate development company.

Frank says builders who aren't looking forward likely will face a shortage of lots to build on just as the market heats up.

"As a builder, you need to be years ahead of the curve," he says. "If you're not, there's a good chance you will run out of land."

Frank says Greenstone Corp. has started developing new lots this year for the first time in recent years. "We've developed lots in almost every one of our projects," he says. Those developments include Kendall Yards, northwest of downtown Spokane; Rocky Hill and the River District, both in Liberty Lake; Montrose, in Post Falls; and Coeur d'Alene Place.

Jason Lawrence, owner of Lawrence Custom Homes Inc., of Spokane says, "The problem is not necessarily today. The issue is coming in the next five-year window."

Because developers stopped developing lots during the recession, it will take time to get new ones on line, Lawrence says.

"We're not seeing many lots coming online in the near future," he says.

Some of the larger builders were able to acquire their large inventories of lots during the downturn, Lawrence says.

"As the economy slowed, larger builders would come in and buy 30 or 40 lots," he says. "That limits the lots available for smaller builders that can't buy 40 lots at a time."

Corey Condron, president of Condron Homes LLC, of Spokane, says he tries to keep a two-year inventory of lots, although that can be difficult in a cyclical market.

Condron says the homebuyer market jolted awake in March and Condron Homes went from having an excess of lots to a low inventory almost overnight.

"The market didn't ease into recovery," he says. "It kind of jumped right into it. Now the absorption rate is outpacing future-lot inventory, so I'm finding myself with a shortage of lots right now."

Condron Homes plans to build at least 50 homes a year in the near future, but only has a current inventory of 60 lots counting some future subdivision phases that "aren't developed on paper yet," Condron says.

Not all vacant lots in the county fit Condron Homes' model.

"I'm more efficient at building in a 25-lot neighborhood than in a four-lot plat," he says.

Joel White, executive officer at the Spokane Home Builders Association, says some homebuilders already are having a hard time acquiring lots, because much of the developable land in the county's designated Urban Growth Area is closely held and not for sale.

While many builders went out of business during the recession, "builders that survived the downturn are as busy as ever," White says. If the economic recovery continues, he asserts the declining inventory of lots "will be a bigger deal in the next year or two."

The process of creating—or platting—new residential lots can take two to five years, he says, adding, "Developers have to get them engineered and approved and install infrastructure."

A handful of large builders and developers own most of the prepared lots and preliminary plats in the county, and no one expects them to sell land to their competitors, White says.

Steve Davenport, senior planner for Spokane County, says the Board of County Commissioners recently adjusted the county's urban growth boundaries to ensure that enough land is available to develop lots for anticipated population growth for 20 years, as required by the state's Growth Management Act.

In a study prepared last fall by the county's planning technical advisory committee, the county and its incorporated cities had a total of 14,000 vacant or preliminarily platted lots, Davenport says.

Preliminary plats have lots approved for development, but not yet developed.

"Every eight years, the county has to evaluate available land to ensure adequate land is available for growth and development," Davenport says, adding, "The urban growth boundaries adopted a few weeks ago were expanded modestly to include some new areas for residential development."

He says he's hearing from the development community, though, that some areas of the county have adequate supplies of available land while others don't.

"It's not equally distributed throughout the Urban Growth Area," he says. "On the South Hill, for example, there's not a lot of land available for development. The Valley has quite a bit more vacant land and more potential areas for growth than certain areas of Spokane for single-family residential development."