Comments on: Builders and ostriches

By: newtotown

newtotown — Tue, 07 Jul 2009 14:30:52 +0000

good thoughts. thanks. who are the best builders in town that have been around for a long time. it seems that the new guys are always looking for a quick buck–and would have the most corners cut?

By: Cos Cobber

Cos Cobber — Tue, 07 Jul 2009 14:11:35 +0000

Newtotown, my guess (I have become a parasite on this blog) is that you certainly can, but it requires patience and flexibility on location and house details. As CF has shared, few builders are giving up the goods in a low ball sale. Instead, they seem to be willing to hang on until all is lost to the bank and take the black eye on their credit report.

There are two other caveats to consider too in this game. i) how soundly was the home built if the builder was already struggling during construction (how deep are the cut corners) and ii) location-location-location & land. many of these spec homes languish due to location mismatch. who wants to own a $3mm home on a street with the next highest home value is $1.5mm? who wants a $2m home without a yard or with some sort of commercial operation as a neighbor…or even a swamp as a neighbor. many of this bargins do have substantive flaws and hence why they remain unsold.

By: newtotown

newtotown — Tue, 07 Jul 2009 13:59:35 +0000

Do you think the value is picking off a spec house today, where you may get a home for far less than replacement, or building new with a good architect and good builder? Have the land values decreased enough to justify purchase and build

By: cos cobber

cos cobber — Tue, 07 Jul 2009 13:48:36 +0000

Marginal land certainy denotes many of the single family and condo spec projects. 75percent might be on the high side; but you have seen more than I. I would guess 50 percent.
Every situation is different; but starting anew seems like a reasonable idea given the decline in the price of raw land and the availabilty of architects and builders.

By: newtotown

newtotown — Tue, 07 Jul 2009 12:26:59 +0000

100 spec houses? i assume that includes all the condos on milbank, in town or by town hall. How many of those are there? how many are actually individual homes? i agree that the townhomes built for 3, 4 or even 5+Million are completely overpriced, but you feel that every single house is worth less than its note. I agree with you on many parts, but even that seems alittle extreme. There are some nice houses out there–not all–but some.

By: christopherfountain

christopherfountain — Tue, 07 Jul 2009 02:55:04 +0000

There are exceptions, but in at least half the spec houses I’ve seen, I agree that starting over on good land is a wiser course of action. Maybe even 75% of the time.

By: anonymous

anonymous — Tue, 07 Jul 2009 02:44:42 +0000

All true…

But I’d bet 95+% of these houses are situated on poor pieces of land and/or shoddily-designed/built, so they may be “fool’s bargains” at any price; such a phenomenon as negative value exists when one properly values opportunity costs of any land and/or house

Suspect most opportunity cost and value-oriented clients would be better served today by buying thoughtfully-chosen land and building what they want in ~18 mos, all at modern prices w/modern (post-bubble) quality standards and tech of hungry, well-chosen, competent architects and builders