no more land, thus the bottom must be close?

[paranoid]

Bugs, I know that builders are running from land options in Other parts of this country, but didn’t know the same thing is happening in SD. Do you have some examples of that in San Diego? I’m sure many people are interessted to learn about it.

[surveyor]

land options

I personally was involved in one project in Valley Center that the builder walked away from (lots of people in Valley Center didn’t want it, but the builder walked away because the market was getting soft. Luckily the builder only put in about $1mil). The landowner is currently shopping around for another buyer, but like a lot of sellers, he wants too much money for the property.

The property in question is about a 1/4 mile west of Valley Center Road, behind a cow and farm operation.

[surveyor]

land options

I personally was involved in one project in Valley Center that the builder walked away from (lots of people in Valley Center didn’t want it, but the builder walked away because the market was getting soft. Luckily the builder only put in about $1mil). The landowner is currently shopping around for another buyer, but like a lot of sellers, he wants too much money for the property.

The property in question is about a 1/4 mile west of Valley Center Road, behind a cow and farm operation.

[surveyor]

one man’s undersupply….

Builders are running (not walking) away from land options right now in a big way. Does that sound like an undersupply situation to you? It surely doesn’t sound like that to me.

What’s irrational is the idea that homes have to be built in large developments.

I agree, homes don’t have to be built in large developments. However, they usually have the biggest profit and the most leeway in terms of negotiating with the sellers, city, county in terms of concessions and services. In terms of desirability, and economies of scale, the large land parcels, those can certainly be considered “undersupplied.”

A lot of times we here in piggington’s fight over definitions (just like me and my wife). While large builders may consider San Diego to be undersupplied in terms of developmentable land, there is more than enough for small businesses and investors. Those builders who do not have any “product” to work in San Diego, they have already closed shop and consolidated their operations out of San Diego (examples? D.R. Horton – they closed their Carlsbad office last year).

[surveyor]

one man’s undersupply….

Builders are running (not walking) away from land options right now in a big way. Does that sound like an undersupply situation to you? It surely doesn’t sound like that to me.

What’s irrational is the idea that homes have to be built in large developments.

I agree, homes don’t have to be built in large developments. However, they usually have the biggest profit and the most leeway in terms of negotiating with the sellers, city, county in terms of concessions and services. In terms of desirability, and economies of scale, the large land parcels, those can certainly be considered “undersupplied.”

A lot of times we here in piggington’s fight over definitions (just like me and my wife). While large builders may consider San Diego to be undersupplied in terms of developmentable land, there is more than enough for small businesses and investors. Those builders who do not have any “product” to work in San Diego, they have already closed shop and consolidated their operations out of San Diego (examples? D.R. Horton – they closed their Carlsbad office last year).

[sddreaming]

Vacant Inventory

paranoid,

I think you misinterpreted the following:

One, lots of the homes/condos out there now are empty. I’m not sure of the exact statistic, but i believe its between 20 and 30 percent. And there is a record amount of inventory for sale at the moment.

The inventory referred to here is real estate for sale, not all the existing houses in San Diego. What is being stated is that 20-30% of the houses up for sale are vacant. These houses are not second homes or vacation homes. These are houses with mortgages, property taxes, etc. that are costing their owners real money and are sitting vacant.

Such a high vacancy rate of inventory doesn’t indicate a housing shortage in San Diego.

[sddreaming]

Vacant Inventory

paranoid,

I think you misinterpreted the following:

One, lots of the homes/condos out there now are empty. I’m not sure of the exact statistic, but i believe its between 20 and 30 percent. And there is a record amount of inventory for sale at the moment.

The inventory referred to here is real estate for sale, not all the existing houses in San Diego. What is being stated is that 20-30% of the houses up for sale are vacant. These houses are not second homes or vacation homes. These are houses with mortgages, property taxes, etc. that are costing their owners real money and are sitting vacant.

Such a high vacancy rate of inventory doesn’t indicate a housing shortage in San Diego.

[Bugs]

There were several articles some months back about some of the big builders walking away (locally) from a number of land options and losing millions in deposits in the process.

I’m also seeing sales transactions for some parcels from one builder to another, borne primarily out of concerns for project feasibility.

The only reason there’s any construction going on right now at all is because these builders are too far into those projects at this point to walk away or to allow those projects to just sit in wait of the more profitable market conditions. Once they get going they all have holding costs in the form of loans, and the terms for those loans are a lot more expensive than for your average home loan.

Going forward there will be fewer 500-unit subdivisions that would attract the big developers, but there are a lot of builders who can profitably develop a 12-unit or 30-unit subdivision and there remain a LOT of parcels in those smaller size ranges.

[Bugs]

There were several articles some months back about some of the big builders walking away (locally) from a number of land options and losing millions in deposits in the process.

I’m also seeing sales transactions for some parcels from one builder to another, borne primarily out of concerns for project feasibility.

The only reason there’s any construction going on right now at all is because these builders are too far into those projects at this point to walk away or to allow those projects to just sit in wait of the more profitable market conditions. Once they get going they all have holding costs in the form of loans, and the terms for those loans are a lot more expensive than for your average home loan.

Going forward there will be fewer 500-unit subdivisions that would attract the big developers, but there are a lot of builders who can profitably develop a 12-unit or 30-unit subdivision and there remain a LOT of parcels in those smaller size ranges.

[sdrebear]

paranoid-

So, New York City can fit over 8 million people onto 301 square miles (which includes an 843 acre park), but you don’t have the vision for how San Diego could add any more housing beyond what our current 1.2 million or so (San Diego City) residents need inside our 324.3 square miles?

If it needs to happen… it will. What others are telling you is that the “need” is not there right now. Based on MANY factors, it is unlikely that this is a real problem for many, many years still.

Others are right though. San Diego had better do A LOT to increase it’s business base, or that “need” will never materialize. (Personally, I’m good with it NOT happening).

[sdrebear]

paranoid-

So, New York City can fit over 8 million people onto 301 square miles (which includes an 843 acre park), but you don’t have the vision for how San Diego could add any more housing beyond what our current 1.2 million or so (San Diego City) residents need inside our 324.3 square miles?

If it needs to happen… it will. What others are telling you is that the “need” is not there right now. Based on MANY factors, it is unlikely that this is a real problem for many, many years still.

Others are right though. San Diego had better do A LOT to increase it’s business base, or that “need” will never materialize. (Personally, I’m good with it NOT happening).

[4runner]

When compared to a real city, the coastal areas of SD county are very low density and there is plenty of room to build up.

Put another way– downtown has the highest density in SD county (still low density compared to a real city) and it has been hit the hardest so far.

If lack of land couldn’t save a place like Tokyo, it sure as heck is not going to save a place like SD county…

[4runner]

When compared to a real city, the coastal areas of SD county are very low density and there is plenty of room to build up.

Put another way– downtown has the highest density in SD county (still low density compared to a real city) and it has been hit the hardest so far.

If lack of land couldn’t save a place like Tokyo, it sure as heck is not going to save a place like SD county…

[paranoid]

sdrebear,

you fact about New York city actually supports (not against) my argument. The high density is exactly why an apartment in NY city is worth millions of dollars! That’s my point: when developable land become more scarce, that will generate a stronger support to the housing price.

The land scarcity is also the reason why the housing in tokyo is much more expensive than other capital in the world.

[paranoid]

sdrebear,

you fact about New York city actually supports (not against) my argument. The high density is exactly why an apartment in NY city is worth millions of dollars! That’s my point: when developable land become more scarce, that will generate a stronger support to the housing price.

The land scarcity is also the reason why the housing in tokyo is much more expensive than other capital in the world.

[Author]

Posts