This is just to stat a discussion on the lack of developed lots that will be realized in the Charleston, Dorchester, Berkley Counties 3-7 years from now. A Builders are forced to be extremely short-sighted by the lending difficulties, they are not committing to future neighborhood positions. This seems like common sense to some but the reality and trickle down of this will be realized when starter home prices for first time buyers and the down size purchase prices spike dramatically when current lot inventory runs out and a mad scramble for lots takes place. This is the reality of how the large builders operate as they react to today's lot price while ignoring tomorrow's demand. Over 1000 people/month move into our Tri County area and that has not shown signs of slowing down.
I know this sounds crazy but, if a developer cannot get commitments with realistic deposits from builders of volume or tract housing, they will not develop these lots or may not purchase the property at all. The net effect is that the 2 year lag time from raw land purchase through finished lots will create a severe void in the market, driving lot pricing and subsequent home pricing back up in several years.
The most obvious affected market for this is the volume or National/Regional Builder product that serves the majority of the affordable housing needs in the Charleston metro market. "Retail Lot" markets will be affected as well but not as noticeably on the surface.
The reality right now is that great smaller builders are being severely penalized and handicapped from taking advantage of the large builder pull back because banks' pendulums have swung too far to the right.
It seems strange to me the lack of information on evaluating and taking a property from raw land trough finished lots. I have been a witness to this process since childhood with my father's involvement in over 30 residential development as either an investor or the general contractor and am in the process of creating a book to help real estate agents, brokers, and owners alike through this process. The absolute biggest mistake made by all parties is to over estimate the profit potential, under estimate the required capital, and ignore the end user as the guide.
Let me kno if you would like to contribute or have any specific topics to be covered. I have a pool of actual development experts who have committed to this idea to help educate professionals and the public as a whole.
Your Watts Team specializes in the sales and development brokerage of residential and mixed use properties. Our team has combined for over $75,000,000 in transactions in Charleston and Beaufort.
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