There are many social networking sites but from a professional perspective, LinkedIn provides opportunities to network and connect with industry professionals from around the world. I started the Land Development Group in late January 2009 and we will surpass 900 members this week. There is no cost to join and participate in the group. Go to http://www.linkedin.com/ and go to groups - "Land Development" to join.
If you are not a member of the LinkedIn “Land Development” networking group, please join, we welcome all industry stakeholders: (please let me know if I have missed a key stakeholder)
Realtors®
Government Regulators
Urban Planners
Land Planners
Land Use Attorneys
Real Estate Attorneys
Surveyors
Land Development Engineers
Soils Engineers
Architects
Traffic Engineers
Investors
Builders
Developers
Land Owners
Economists
Marketing Professionals
Lenders
Recruiters
Water & Wastewater Engineers
Vendors
General Public
Community Associations
Academia
Contractors
Software Providers
Environmental Specialists
Government Officials
Planning and Zoning Board Members
I will be releasing "The Future of Land Development Part III" is September which will be of interest to all land development professionals.
Monday, August 31, 2009
Friday, August 28, 2009
What is a Sustainable Real Estate Project?
Sustainable communities are defined by most industry professionals as projects meeting social, environmental, and economic objectives. The easiest way to achieve a sustainable project is by designing a mixed use project. The retail, office, and residential components of a mixed use project may be distributed but interconnected over a site or be vertically integrated. Mixed use zoned land should be evaluated for acquisition before a fragmented residential subdivision site is considered for development. The market will demand it; government will insist on it; and it makes sense.
As an industry, we have for a long time considered the environmental consequences of a project and we have been sensitive to site environmental characteristics. Our industry is "green".
Real estate development is economic driven, not only for the self contained project but for the economic benefits to the municipality. Mixed use projects provide the absorption of land over multiple uses rather than be single market driven i.e. single family residential. The various uses provides a wider allocation of costs which benefits the overall performance of the project.
Social factors have not always been adhered to by builders since price points are established by the market - real or artificial. Mixed use projects, vertical or horizontal integration, provides the best opportunity to market a spectrum of price points for all demographic segments.
Will the above change even more once the government focus is on correcting the cause of our current economic down turn. "The Future of Land Development Part II" will be released next week.
Thursday, August 27, 2009
Home Prices Rose in Second Quarter
Release date: 08/26/09
U.S. home prices rose in the second quarter for the first time in three years while logging a second-straight monthly increase in June, according to the S&P Case-Shiller home-price indexes.For the second quarter, the S&P Case-Shiller U.S. National Home Price Index posted a 14.9% drop from a year earlier, an improvement over the record 19.1% drop in the first quarter. It was up 2.9% sequentially.
David M. Blitzer, chairman of S&P's index committee, said he's seeing some positive signs for the second month in a row and sees "hints of an upward turn from a bottom."
The monthly numbers showed 15 of 20 major metropolitan areas posted price declines of more than 10% from a year earlier, with the Sun Belt continuing to be hit the hardest. Nationally, home prices are at levels similar to early 2003.
At the end of the second quarter, average national home prices are down 30% from their peak in the second quarter of 2006.The indexes showed prices in both 10 and 20 major metropolitan areas fell 15% in June from a year earlier and rose 1.4% from May. Eighteen regions reported a slight price increase in June from a month earlier. Month-to-month gainers were again led by Cleveland, which posted a 4.2% gain, and San Francisco, which rose 3.8%. Las Vegas again fared worse, dropping 2%.
For the 15th straight month, no region was able to avoid a year-over-year decline. Las Vegas edged out Phoenix as the worst performer. The two cities posted drops of 32.4% and 31.6%, respectively. Detroit followed with a 25% decline. The best year-over-year performer was Dallas, which posted a 2.2% decline.
The data come a few days after the National Association of Realtors said existing-home sales jumped to their highest level in nearly two years last month as cheaper prices and the availability of tax credits continued to entice buyers.
Source: The Wall Street Journal
U.S. home prices rose in the second quarter for the first time in three years while logging a second-straight monthly increase in June, according to the S&P Case-Shiller home-price indexes.For the second quarter, the S&P Case-Shiller U.S. National Home Price Index posted a 14.9% drop from a year earlier, an improvement over the record 19.1% drop in the first quarter. It was up 2.9% sequentially.
David M. Blitzer, chairman of S&P's index committee, said he's seeing some positive signs for the second month in a row and sees "hints of an upward turn from a bottom."
The monthly numbers showed 15 of 20 major metropolitan areas posted price declines of more than 10% from a year earlier, with the Sun Belt continuing to be hit the hardest. Nationally, home prices are at levels similar to early 2003.
At the end of the second quarter, average national home prices are down 30% from their peak in the second quarter of 2006.The indexes showed prices in both 10 and 20 major metropolitan areas fell 15% in June from a year earlier and rose 1.4% from May. Eighteen regions reported a slight price increase in June from a month earlier. Month-to-month gainers were again led by Cleveland, which posted a 4.2% gain, and San Francisco, which rose 3.8%. Las Vegas again fared worse, dropping 2%.
For the 15th straight month, no region was able to avoid a year-over-year decline. Las Vegas edged out Phoenix as the worst performer. The two cities posted drops of 32.4% and 31.6%, respectively. Detroit followed with a 25% decline. The best year-over-year performer was Dallas, which posted a 2.2% decline.
The data come a few days after the National Association of Realtors said existing-home sales jumped to their highest level in nearly two years last month as cheaper prices and the availability of tax credits continued to entice buyers.
Source: The Wall Street Journal
Wednesday, August 26, 2009
University of North Carolina Charlotte (UNCC)
Land Development Studio Class is a Go!
The State of NC has been in a crisis mode for many months and has affected the budget of every school. The budgetary constraints are passed down to the various college departments – including the Civil and Environmental Engineering Department. The state has also imposed guidelines on class size. The budget and class size issues have been resolved for the Land Development Studio class.
This class is one of four courses civil engineering students may take in the Land development Concentration Program at UNCC. This is the first undergraduate program addressing land development engineering as a core civil engineering discipline.
The State of NC has been in a crisis mode for many months and has affected the budget of every school. The budgetary constraints are passed down to the various college departments – including the Civil and Environmental Engineering Department. The state has also imposed guidelines on class size. The budget and class size issues have been resolved for the Land Development Studio class.
This class is one of four courses civil engineering students may take in the Land development Concentration Program at UNCC. This is the first undergraduate program addressing land development engineering as a core civil engineering discipline.
You may comment and provide your thoughts on the following course objectives:
1. Objective: To learn methodologies used in subdividing or site planning
1. Objective: To learn methodologies used in subdividing or site planning
property for single family residential, multifamily residential, commercial and mixed use projects.
2. Objective: To effectively work as a design team member using fundamental land development skills in a design studio format.
3. Objective: To learn planning and engineering design concepts achieving
2. Objective: To effectively work as a design team member using fundamental land development skills in a design studio format.
3. Objective: To learn planning and engineering design concepts achieving
sustainability by comprehensive project development and proper utilization of land using stormwater management, best management practices, LID, and LEED design solutions
4. Objective: To prepare engineering infrastructure plans using land
4. Objective: To prepare engineering infrastructure plans using land
development engineering design skill sets.
5. Objective: To learn land development engineering project management skills and administration.
5. Objective: To learn land development engineering project management skills and administration.
15 - senior year civil engineering students have registered for the class and I am excited about teaching the Studio class for the second year.
Tuesday, August 25, 2009
Finished Lot Investment Strategy
A subdivision with a home selling price point of $400,000 in 2005 – would have an estimated finished lot cost of $80,000. A finished lot is defined as a “ready-to-go” lot for building operations.
In 2009, the price point for the same house has probably dropped over 20%. In some markets, the price reduction has been more severe. Let’s use 25% for discussion purposes. The sales price for the same home in the same subdivision would have to be priced at $300,000 to reach the current buyers. In fact, in many markets, the $300,000 price point is the upper threshold of homes selling. A $300,000 home would be built on a finished lot price of $60,000.
Builders have filed for bankruptcy, holding onto the land until the market turns, or is in a distressed situation because they paid too much for the land or finished lot. Also, there are not many individual buyers of a $60,000 finished lot and this will cause the project to stall and possibly be taken back by the lender.
A project taken back by the lender will need to dispose of this land asset. The land acquisition and infrastructure loan may have been reduced and purchasing lots at a significant discount may be acceptable to a lender just to remove the asset off their books.
The key would be to offer the lender a price even below what the current loan value for each finished lot. The lender would take a loss but dispose of the asset. To further illustrate the example, let’s say we would buy the lot for 30% of the current value of the finished lot of $60,000- which may even be more than the loan since developer markup finished lots significantly over the past 10 years of business. The lot could be purchased at $18,000.
When the market returns and prices start to increase, finished lots will be in demand since we know from previous housing recessions that production can’t keep up with the demand. Finished lots would be the first to sell.
Let’s say that the lot was held for 2-years at 10% per year + RE taxes and sold at the current sales price of $60,000? Your return would be? Pick a price to sell the lot and calculate when to sell --- does it make sense? Once the market returns, home selling price points will be adjusted significantly. The key is to negotiate land and/or finished lots with lenders to achieve significant reductions in prices. Real estate investment is a risk but selecting the right market, location and price point will reduce the risk.
There are significant opportunities in buying land with different uses and in all markets; residential, commercial/retail, office, apartments, and vacant land.
If you want to explore this real estate investment strategy more in-depth, please let me know.
In 2009, the price point for the same house has probably dropped over 20%. In some markets, the price reduction has been more severe. Let’s use 25% for discussion purposes. The sales price for the same home in the same subdivision would have to be priced at $300,000 to reach the current buyers. In fact, in many markets, the $300,000 price point is the upper threshold of homes selling. A $300,000 home would be built on a finished lot price of $60,000.
Builders have filed for bankruptcy, holding onto the land until the market turns, or is in a distressed situation because they paid too much for the land or finished lot. Also, there are not many individual buyers of a $60,000 finished lot and this will cause the project to stall and possibly be taken back by the lender.
A project taken back by the lender will need to dispose of this land asset. The land acquisition and infrastructure loan may have been reduced and purchasing lots at a significant discount may be acceptable to a lender just to remove the asset off their books.
The key would be to offer the lender a price even below what the current loan value for each finished lot. The lender would take a loss but dispose of the asset. To further illustrate the example, let’s say we would buy the lot for 30% of the current value of the finished lot of $60,000- which may even be more than the loan since developer markup finished lots significantly over the past 10 years of business. The lot could be purchased at $18,000.
When the market returns and prices start to increase, finished lots will be in demand since we know from previous housing recessions that production can’t keep up with the demand. Finished lots would be the first to sell.
Let’s say that the lot was held for 2-years at 10% per year + RE taxes and sold at the current sales price of $60,000? Your return would be? Pick a price to sell the lot and calculate when to sell --- does it make sense? Once the market returns, home selling price points will be adjusted significantly. The key is to negotiate land and/or finished lots with lenders to achieve significant reductions in prices. Real estate investment is a risk but selecting the right market, location and price point will reduce the risk.
There are significant opportunities in buying land with different uses and in all markets; residential, commercial/retail, office, apartments, and vacant land.
If you want to explore this real estate investment strategy more in-depth, please let me know.
Monday, August 24, 2009
Your opinion on the Market
The real estate market may be summarized by the above graph. Assess your market and determine where you think the market is Today. Using past housing recessions as a guide and in my opinion, we are at the point of maximum opportunity. The key question is whether the market is "V" or "U" shaped? We may be bouncing along the bottom well into 2010. This only represents a unique opportunity to invest in real estate. Tomorrow, I will post a business strategy for buying residential finished lots - NOW! Friday, August 21, 2009
My Links
As my first week of blogging comes to an end, it is important for readers and followers to have links to my websites and LinkedIn profile. I encourage all to join my Land Development Group on LinkedIn. I started this group in mid-January of this year and we have over 860 members to date and growing at a rate of four networkers per day. We have members from around the world and are willing to connect with industry professionals.
Buying, selling, designing, permitting, developing and using land for profit is an international industry which will be addressed in detail as we move forward with this blog. The inudstry will change and this forum will outline how to be successful in a global real estate development industry. My Links:
My Company website: www.DavidEJohnsonPE.com
My Real Estate website: www.NCLandandHomes.com
My LinkedIn Profile: www.linkedin.com/in/djohnsonpe
Buying, selling, designing, permitting, developing and using land for profit is an international industry which will be addressed in detail as we move forward with this blog. The inudstry will change and this forum will outline how to be successful in a global real estate development industry. My Links:
My Company website: www.DavidEJohnsonPE.com
My Real Estate website: www.NCLandandHomes.com
My LinkedIn Profile: www.linkedin.com/in/djohnsonpe
Thursday, August 20, 2009
The Livable Communities Act of 2009
has been introduced in the Senate by Chris Dodd, Robert Menendez, Jeff Merkley, Michael Bennet, and Dan Akaka. Link to http://www.nado.org/legaffair/section.pdf for specific information on the legislation.
This legislation will provide grants to help communities promote sustainable development by reducing traffic problems through tranist-oriented projects, reduce greenhouse gas emissions, reduce gas consumption, protect rural areas and open space, channel development trends to urban centers and create more affordable housing. This will be another effort in using federal funds to further guide local municipalities in implementing development patterns.
Our industry is changing and we must be on the cutting-edge of this change.
This legislation will provide grants to help communities promote sustainable development by reducing traffic problems through tranist-oriented projects, reduce greenhouse gas emissions, reduce gas consumption, protect rural areas and open space, channel development trends to urban centers and create more affordable housing. This will be another effort in using federal funds to further guide local municipalities in implementing development patterns.
Our industry is changing and we must be on the cutting-edge of this change.
Wednesday, August 19, 2009
Housing Starts Showing Signs of??
http://cl.exct.net/?qs=e1e531a75b93631cbfdf32bba998ba2a3cdb48454a9515f03301efac154255a0
Click on the above link to read yesterday's report on housing starts. Building permits rose for the fourth consecutive month and this should be considered a positive sign but not so much! A rise in housing starts tells me that builders have finally reinvented their product to smaller homes on previously owned lots. They are probably making a small profit but no a signficant % profit. The increase in housing starts is minimal and it only supports the notion that the housing industry will be bouncing along the bottom for the near term. Since we are heading into fall and winter months, typically the industry reduces new housing starts. Let's compare single family housing starts during the last housing recessions:
YEAR SF HOUSING STARTS
1974 888,000
1981 705,400
1991 840,400
2001 1,273,300
2008 622,000
2009 Projected 458,000
Remember, the 20-year average for SF housing starts is 1,200,000 per year. In reviewing the above history, each recession resulted in a pent-up demand for new homes. We had V recoveries. The pent-up demand, today, is being satisfied by foreclosures. If you are a builder, how would you postion your company for 2010? I will provide you my opinons upon request.
Click on the above link to read yesterday's report on housing starts. Building permits rose for the fourth consecutive month and this should be considered a positive sign but not so much! A rise in housing starts tells me that builders have finally reinvented their product to smaller homes on previously owned lots. They are probably making a small profit but no a signficant % profit. The increase in housing starts is minimal and it only supports the notion that the housing industry will be bouncing along the bottom for the near term. Since we are heading into fall and winter months, typically the industry reduces new housing starts. Let's compare single family housing starts during the last housing recessions:
YEAR SF HOUSING STARTS
1974 888,000
1981 705,400
1991 840,400
2001 1,273,300
2008 622,000
2009 Projected 458,000
Remember, the 20-year average for SF housing starts is 1,200,000 per year. In reviewing the above history, each recession resulted in a pent-up demand for new homes. We had V recoveries. The pent-up demand, today, is being satisfied by foreclosures. If you are a builder, how would you postion your company for 2010? I will provide you my opinons upon request.
Tuesday, August 18, 2009
The Future of Land Development 2
I am currently finishing my white paper on the Future of Land Development Part 2. This short paper explores how government will use land, zoning, and eminent domain to guide development patterns. It is conceivable that this out of the box prediction may come true. The real estate industry will change as our economy recovers -- but how drastic?
Monday, August 17, 2009
Social Networking Video
You need to view this video because we will no longer "have a failure to communicate"!
http://www.youtube.com/watch?v=sIFYPQjYhv8
http://www.youtube.com/watch?v=sIFYPQjYhv8
Sunday, August 16, 2009
August 16 - It is time to Invest in Real Estate
There is an over-supply of homes on the market, prices are bouncing along the bottom, seller’s are making price concessions, and interest rates remain LOW. Houses, apartment complexes, retail centers, and vacant land below market prices are all great opportunities to explore for short and long term investment strategies. Real estate investment strategies can be customized for each investor. This is the best time to explore opportunities in every marketplace.
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