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November 13, 2009 at 2:35 PM #483046November 13, 2009 at 2:47 PM #483363
jficquette
Participant[quote=sdrealtor]This aint Atlanta. Good rule of thumb: 1/3rd for land, 1/3rd for construction and 1/3rd for margin.[/quote]
I don’t think even Atlanta is that low any more. However I was a Controller for a large homebuilder and the conventional wisdom at the time which was in the early 80’s that you couldn’t make money if lot cost was > 25%
However that was back when they wanted lower ratio’s, down payments. Back then our mortgage company would call the buyers employer to make sure they were still working there on the day of closing (g).
The relationship got out of wack when the underwriting standards were revamped along with the bubble in raw land prices.
John
November 13, 2009 at 2:47 PM #483138Participant[quote=sdrealtor]This aint Atlanta. Good rule of thumb: 1/3rd for land, 1/3rd for construction and 1/3rd for margin.[/quote]
I don’t think even Atlanta is that low any more. However I was a Controller for a large homebuilder and the conventional wisdom at the time which was in the early 80’s that you couldn’t make money if lot cost was > 25%
However that was back when they wanted lower ratio’s, down payments. Back then our mortgage company would call the buyers employer to make sure they were still working there on the day of closing (g).
The relationship got out of wack when the underwriting standards were revamped along with the bubble in raw land prices.
John
November 13, 2009 at 2:47 PM #483056Participant[quote=sdrealtor]This aint Atlanta. Good rule of thumb: 1/3rd for land, 1/3rd for construction and 1/3rd for margin.[/quote]
I don’t think even Atlanta is that low any more. However I was a Controller for a large homebuilder and the conventional wisdom at the time which was in the early 80’s that you couldn’t make money if lot cost was > 25%
However that was back when they wanted lower ratio’s, down payments. Back then our mortgage company would call the buyers employer to make sure they were still working there on the day of closing (g).
The relationship got out of wack when the underwriting standards were revamped along with the bubble in raw land prices.
John
November 13, 2009 at 2:47 PM #482520Participant[quote=sdrealtor]This aint Atlanta. Good rule of thumb: 1/3rd for land, 1/3rd for construction and 1/3rd for margin.[/quote]
I don’t think even Atlanta is that low any more. However I was a Controller for a large homebuilder and the conventional wisdom at the time which was in the early 80’s that you couldn’t make money if lot cost was > 25%
However that was back when they wanted lower ratio’s, down payments. Back then our mortgage company would call the buyers employer to make sure they were still working there on the day of closing (g).
The relationship got out of wack when the underwriting standards were revamped along with the bubble in raw land prices.
John
November 13, 2009 at 2:47 PM #482690Participant[quote=sdrealtor]This aint Atlanta. Good rule of thumb: 1/3rd for land, 1/3rd for construction and 1/3rd for margin.[/quote]
I don’t think even Atlanta is that low any more. However I was a Controller for a large homebuilder and the conventional wisdom at the time which was in the early 80’s that you couldn’t make money if lot cost was > 25%
However that was back when they wanted lower ratio’s, down payments. Back then our mortgage company would call the buyers employer to make sure they were still working there on the day of closing (g).
The relationship got out of wack when the underwriting standards were revamped along with the bubble in raw land prices.
John
November 13, 2009 at 5:16 PM #482782oxfordrick
ParticipantGood historic boomtime rule.
Land prices fall faster than construction costs and house prices in a crash. If things get bad enough land may not even be worth the unpaid property tax and Mello Roos debt thta has attached.
Which would be a problem for the bondholders, not to mention the other residents of the subdivision.
November 13, 2009 at 5:16 PM #483457ParticipantGood historic boomtime rule.
Land prices fall faster than construction costs and house prices in a crash. If things get bad enough land may not even be worth the unpaid property tax and Mello Roos debt thta has attached.
Which would be a problem for the bondholders, not to mention the other residents of the subdivision.
November 13, 2009 at 5:16 PM #483151ParticipantGood historic boomtime rule.
Land prices fall faster than construction costs and house prices in a crash. If things get bad enough land may not even be worth the unpaid property tax and Mello Roos debt thta has attached.
Which would be a problem for the bondholders, not to mention the other residents of the subdivision.
November 13, 2009 at 5:16 PM #483232ParticipantGood historic boomtime rule.
Land prices fall faster than construction costs and house prices in a crash. If things get bad enough land may not even be worth the unpaid property tax and Mello Roos debt thta has attached.
Which would be a problem for the bondholders, not to mention the other residents of the subdivision.
November 13, 2009 at 5:16 PM #482615ParticipantGood historic boomtime rule.
Land prices fall faster than construction costs and house prices in a crash. If things get bad enough land may not even be worth the unpaid property tax and Mello Roos debt thta has attached.
Which would be a problem for the bondholders, not to mention the other residents of the subdivision.
November 13, 2009 at 5:26 PM #482806Participant[quote=oxfordrick]Good historic boomtime rule.
Land prices fall faster than construction costs and house prices in a crash. If things get bad enough land may not even be worth the unpaid property tax and Mello Roos debt thta has attached.
Which would be a problem for the bondholders, not to mention the other residents of the subdivision.[/quote]
Thats why builder’s can always make money even in the worst of markets if they can get the land cheap enough.
November 13, 2009 at 5:26 PM #483482Participant[quote=oxfordrick]Good historic boomtime rule.
Land prices fall faster than construction costs and house prices in a crash. If things get bad enough land may not even be worth the unpaid property tax and Mello Roos debt thta has attached.
Which would be a problem for the bondholders, not to mention the other residents of the subdivision.[/quote]
Thats why builder’s can always make money even in the worst of markets if they can get the land cheap enough.
November 13, 2009 at 5:26 PM #482639Participant[quote=oxfordrick]Good historic boomtime rule.
Land prices fall faster than construction costs and house prices in a crash. If things get bad enough land may not even be worth the unpaid property tax and Mello Roos debt thta has attached.
Which would be a problem for the bondholders, not to mention the other residents of the subdivision.[/quote]
Thats why builder’s can always make money even in the worst of markets if they can get the land cheap enough.
November 13, 2009 at 5:26 PM #483257Participant[quote=oxfordrick]Good historic boomtime rule.
Land prices fall faster than construction costs and house prices in a crash. If things get bad enough land may not even be worth the unpaid property tax and Mello Roos debt thta has attached.
Which would be a problem for the bondholders, not to mention the other residents of the subdivision.[/quote]
Thats why builder’s can always make money even in the worst of markets if they can get the land cheap enough.
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