Teardown Post

From where we sit (Hinsdale, IL), the market for redevelopment property has improved.  Is this temporary - I don’t know.  What we do know is that those builders that have the capital (and courage) to undertake spec projects are capturing the existing business and have become the benefactor of any new business (building new custom homes for clients).  Activity seems to be breeding opportunity.  Maybe it’s time to peek out from under the desk, get some funding, find a price point in the marketplace that is void of good product and get back to work?

While price discovery is still in process.  We are seeing buyers begin to be more aggressive in their search for property.  In some cases, we clearly have seen the pendulum swing too far to the downside filling pricing gaps formed from the great “run-up” in prices from 2002-20051/2.  New price handles in the $200’s are being bought up quickly.  On the other end, and most surprising, some new construction projects - both for “spec” and custom are valued and trading at price points actually higher than during the height of the bubble - figure that out.

It’s not easy out there but, at some point we will look back and see where we bottomed.  We just may be there now.

  Brian

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I caught this article about distressed foreclosures on CNN today. I agree with the observations noted in the story; many of the bank-owned properties that I have been showing to teardown buyers these days are complete wrecks in need of a skilled builder.

Too Damaged To Sell?

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High-end buyers looking for quality, not quantity, in square footage.

by MARY ELLEN PODMOLIK  chicagotribune.com

McMansions epitomized the excesses of the housing market, but don’t think that just because the market is in the dumps, the desire for overbuilt homes has dried up.

The people who can afford to be in the upper brackets of residential real estate are the least affected by the housing sector meltdown and they are still thinking big. Or almost as big.

“We’re still seeing large homes maximize the floor area ratio of the lots,” said Brian Hickey, who launched Teardowns.com in 2001. “I would think that size would come down a little, but we haven’t [seen that] yet.”

A case in point: An 11,605-square-foot home by King’s Court Builders in Naperville, complete with his-and-her libraries and listed for $4.95 million, sold before it was able to participate in the Chicago Luxury Home Tour that ends Sunday.

Meanwhile, earlier this month in Hinsdale, builder Dominic O’Neill already had a few potential clients for a spec house he planned to build on a teardown lot even before he closed on the purchase and bulldozed the house. The house’s footprint will be as big as the village will allow, he said, because that’s what clients want. 

Read on…

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While talking with friends in UAE today, we touched on the topic of real estate development and investment in Dubai. After our call, I did a little more research online and checked out various articles. Apparently, the Dubai market is still quite vigorous and new developments are selling and leasing very well.

Another telling sign; according to Khaleej Times Online, there was more than 6 million tons of construction waste in Dubai over the first half of 2008, double the amount accumulated throughout all of 2007. Also, UAE’s first construction waste management plant opened in May of this year.

While nothing is confirmed yet, friends are doing a great job of putting both pressure and guilt on me to visit early next year. I admit I don’t enjoy the idea of a 14 hour flight, but I am rather intrigued by all of the things I’m seeing and hearing about UAE, especially with regard to real estate.

Here’s an address to an interesting blog about Dubai real estate development with some great pictures!

http://desinotes.com/a-glimpse-of-the-real-estate-development-in-dubai

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Does a family with two kids really need a 3,200-square-foot home?” asks Vickie Nyland, president of developer Taylor Morrison’s Northern California Division, also based in San Ramon. “I think nesting is what our culture is going through now.”

So look for these in the next few years: smaller single-family houses, as compact as 1,500 square feet, clustered around village-style greenspaces; infill housing that revitalizes old commercial and industrial space in cities and suburbs; modernist styles for young singles and couples who want the urban buzz of “Seinfeld” and “Sex and the City.” Expect to find more ecologically friendly homes with tankless water heaters, built-in solar panels and water-saving drip irrigation. Say goodbye to “volume” ceilings and media niches …

Here’s what’s coming, and in some cases, ready now:

• Upgrades for home electronics. Designers are wiring houses for computer use everywhere. And with flat-screen TVs, every room can be a media room. The “new house of tomorrow” set to open at Disneyland will feature a digital lifestyle that’s already available. According to one source, you’ll be able to walk in the door after work, shout out a song title, and hear the music before you can open the refrigerator and grab a beer.
• Condos with homelike and neighborhood features. Oakland’s Pacific Cannery Lofts include areas equipped for residents to wash their dogs and secure bicycle storage in a “bike lounge.” Due soon is a cafe and gallery featuring work by local artists and gourmet Blue Bottle coffee.
• Going green. Buyers are more concerned about “sustainability” to cut heating and cooling costs, water and electricity use. But builders say they’re not always willing to pay for green features. (For ideas, and Bay Area builders, check out www.BuildItGreen.org.)
• Multigeneration houses. Builders are designing not just in-law apartments, but communal and private space for grandparents and extended families.
• Garages in the back, not the front. Builders call it “private lane” access for parking, not back alleys. But the result is the same, shifting cars and driveways. “Nobody wants to look at garages,” says one building executive.
• Fewer cookie-cutter developments. “Builders are looking for more diversity, an eclectic blend of styles” to give buyers some semblance of individuality, says Cheryl O’Connor, vice president of sales and marketing for Warmington Homes’ Northern California division and chairwoman of the Northern California Home Builders Association.

By Robert Taylor read on …

Popularity: 34% [?]