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Bugs.
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April 28, 2007 at 10:09 AM #8948April 28, 2007 at 11:45 AM #51365
Bugs
ParticipantIt just so happens I’m appraising a piece of land that will be built out as a subdivision right now. This one is located in Carlsbad. The timeline to get all the preliminary work done necessary to obtain approvals and record the subdivision map is at least 2 years, and that’s if the developer is on top of things.
One of the things that’s apparent is that the market for subdividable land is extremely weak. Sales were steady up to the middle of 2005 and then it basically dropped off a cliff. Big surprise.
Anyways, my point is that many of the new sales are being built on land that was initially purchased as far back as 2002. After those lots are built out, there will be a 2-year lag between land purchase and sales of homes. Inevitably it is that lag that helps fuel the initial stages of the upcycle.
Of course, we still have to burn through all the standing inventory of new and resale homes before there will be significant demand for new construction. It might be worth noting that in 1995, the MLS recorded about 16,000 sales, which is about 50% of the volume sold in 2005. We now have 20,000 listings in the MLS, not counting the people who might like to sell but can’t.
IMO, these numbers do not favor a turn in the cycle until 2009 at the earliest. I’m GUESSING a 24,000 overall volume for 2007, followed by maybe as few as 18,000 in 2008. That might even be a little optimistic – one never knows.
If those numbers do come about, developable land may be a good bet in 2008. If you have the cash, you can lock a parcel up in contract whilst pursuing the development approvals and sell to a builder when the map is ready to be recorded. The builder pays the final installment of fees and permits, starts building and has product ready to sell in 6 months.
April 29, 2007 at 9:45 PM #51418surveyor
Participanttalk about hopeless causes…
It just so happens I’m appraising a piece of land that will be built out as a subdivision right now. This one is located in Carlsbad. The timeline to get all the preliminary work done necessary to obtain approvals and record the subdivision map is at least 2 years, and that’s if the developer is on top of things.
Hmmm… City of Carlsbad. Two years to do the work for the subdivision map.
The best developer in the world couldn’t do that timeframe within the City of Carlsbad. The City of Carlsbad tends to ask for the moon.
The developer has my sincere sympathies…
April 30, 2007 at 3:14 PM #51471Carlsbadliving
ParticipantTwo years may be do-able in Carlsbad if the property already has an approved Master Plan and just needs a tentative map.
You working on the West Village Bugs?
April 30, 2007 at 3:39 PM #51474The-Shoveler
ParticipantNor_LA-Temcu-SD-Guy
I think the bottom line is FORECLOSURES !!,
Hell these things (houses) may even be worth what they were sold for, But just too many of them were sold to people who had no business even driving through that neighborhood (at that price). So there will be a fair amount of them on the market that must be sold I believe.
Just My opinion.
April 30, 2007 at 6:35 PM #51491ParticipantNo, not the west village. Beyond that, I’m not at liberty to say.
Surveyor probably is right about the time it would normally take. Carlsbad is tough. They’re not the toughest but they’re also not far off.
I’ve seen a lot of developers over the years, and this guy really is top notch. Those of you who have been around on Pigginton’s know I don’t just toss that type of comment around lightly. We’ll see if he can pull it off.
Quite frankly, the appraisal may be more of a problem for them than anything else. It looks like the listings are running quite a bit lower than the sales from 2005. It’s kinda hard to tell, what with some of the long escrow periods.
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