The homebuilder land inventory revolution
While most headlines point to higher mortgage rates and higher construction costs, the most significant change is happening to something much earlier in the homebuilding process, land inventory. BTI Partners’ recent $93 million acquisition of 3,200 acres in Florida’s Jacksonville metro area, exemplifies how homebuilder land inventory strategies are a powerful tool to open new opportunities in some of the country’s fastest-growing markets.
Builders are looking to more efficiently manage their most valuable commodity – land that is ready to build homes on. Homebuilders are less frequently acquiring undeveloped, large land tracts that take years to entitle and develop. Instead, they are keenly focused on establishing long-term partnerships with master plan community developers and land bankers.
These groups take on the risks and costs until homebuilders are ready to build homes based upon near-term demand. Today, homebuilders seek to acquire just enough land inventory to meet current demand, focusing on land or homesites that require the least amount of construction so that they can start building homes as quickly as possible. The model, now widely viewed as an inventory solution for homebuilders, has gained momentum in recent years. It gives builders a flexible, lower-risk way to grow in fast-emerging housing markets where demand is strong and timing is everything.
Strategic homebuilder inventory solutions are reshaping the industry and fueling the rise of master-planned communities designed to function as self-sustained neighborhoods. These developments feature schools, town centers, recreation facilities, preserved natural spaces and a mix of amenities that create a strong sense of community and draw today’s homebuyers.
Land banking is also increasingly changing the way homebuilders operate. According to a study by John Burns Research & Consulting, publicly traded builders now control more than 2 million lots, up from 1.4 million in 2020, yet they own a smaller share of that inventory than ever before. As recently reported in 2017, public builders owned about 64% of their lots and optioned 36%. Those figures have essentially flipped; builders now own just 26% of their lots while holding options on three-quarters of their pipeline.
Land inventory strategies are proving especially effective around major metro areas, where fast-growing populations want attainable housing within a reasonable commute to jobs.The Jacksonville metro area, where our latest acquisition is located, offers an appropriate mix of affordability, job growth, and available land conditions that make it ideal for homebuilding.
As part of our homebuilder inventory solution strategy, we partnered with state transportation officials to build a new interstate interchange. This level of investment allows us to secure better pricing, move permitting forward more quickly and maintain consistent quality while giving builders predictable costs, stronger road connectivity and reliable delivery schedules.
The land inventory models work because they bring economies of scale and specialized expertise that most individual builders can’t match and this lets the homebuilders focus on what they do best: selling and building homes. Turning raw land into shovel-ready lots means years of work and investment while many builders prefer to keep focused on homebuilding.
Master-planned communities also spread costs and benefits across all future homes. Shared schools, amenities, and commercial space provide homebuyers the quality of life they expect and speed up sales for everyone involved.
Quality is central to making this model work. In Clay County, we committed 51% of the land to open space conservation, along with three school sites and trail systems that connect to natural areas. These investments may raise development costs, but they deliver stronger absorption, faster sales and premium pricing.
Over time, this approach builds compounding advantages. Our success with Laurelton has attracted several of the top 20 national homebuilders. Builders entering Jacksonville can now lean on local expertise and established infrastructure instead of starting from scratch.
Ultimately, modern homebuilding inventory solutions mark a shift in how our industry manages its supply chain. By separating land development from homebuilding, it allows each party to focus on their strengths, while reducing systemic risks that have long held back housing supply. Our communities show how this model can serve both market demand and community character while setting the stage for future growth in key markets across the country.
By Justin Onorato. He is the Chief Investment Officer at BTI Partners and can be reached at justin@btipartners.com.
