If You Build It

The shortage of housing inventory for sale is persuading some agents and brokers to get into real estate development.

By Daniel Bortz

In a normal year, Grant Johnson, a real estate agent at RE/MAX Results in Minneapolis–St. Paul, Minn., divides his time equally between selling existing homes and developing land for new- home construction. But the pandemic has flipped Johnson’s business on its head. “Listings have been very difficult to come by,” said Johnson. As a result, he decided to scale up his land development work. “Typically, the builder that I work with and I put together 20 to 30 lots a year,” he said. “This year we’re going to be developing 70 lots.” In addition to procuring the land, Johnson will represent the builder as a listing agent. “Creating our own inventory has helped us survive the pandemic,” he said. Diversifying business streams amid a period of record-low inventory has been a productive move for Johnson and many real estate agents and brokers this year. National Association of Realtors® Chief Economist Lawrence Yun said, “2021 is likely to have the most acute shortage of homes for sale in history.” The numbers make the urgency clear. Unsold inventory remains scant, hovering at a twomonth supply during the first half of the year. In April, days-on-market was the shortest ever recorded at 17 days, down from 29 in March 2020. The typical listing received more than five offers, April’s Realtors® Confidence Index survey found.

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In June, NAR published a study titled “Housing Is Critical Infrastructure,” showing that the U.S. has underbuilt its housing needs by at least 5.5 million units over the past 20 years. To fill that gap, the report said, the country needs to build at least 2 million units per year for the next decade, a 60 percent higher production pace than in 2020. Dan Lesniak has witnessed the dearth of home supply in Washington, D.C. Lesniak, founder of the Orange Line Living Team, said homes in his market are getting snatched up in the blink of an eye. “Some of our buyer clients are getting frustrated, because they’re striking out on home after home,” he said. To cope with the shortage of existing homes, Lesniak and his business partner Sunil Saxena, a general contractor, have doubled down on their condominium construction projects during the pandemic. “It’s given us another revenue stream, and it’s given our home buyers access to more properties,” Lesniak said. Brandi Pearl Thompson, a real estate agent at Keller Williams Realty in Chattanooga, Tenn., recently began building new homes. “Right before the pandemic I partnered with a local contractor, and we purchased seven lots,” Thompson said. So far she has built and sold eight single-family homes on the land, and she’s planning to start developing multifamily housing. “That’s the next stage of growing the business,” said Thompson, who also flips houses. It’s not only individual agents who are recognizing the value of branching out. Luxury real estate brokerage Harry Norman, Realtors®, in Atlanta launched a new developer services division in April, which provides marketing, sales, leasing, and advisory services to residential builders and developers. “We help developers locate land and assess whether a piece of land would be a good place to build homes,” explains division head Leslie Johnson (no relation to Grant Johnson). “We also help them decide what kind of homes to build, what price point to set, and how to market the homes, and then we serve as the listing agent.” Leslie Johnson said the development operation rolled out at precisely the right time. “It’s hard to believe just how bad the lack of inventory is right now,” he said. Four to six months of

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