Re: Lot Development Model | <– Date –> <– Thread –> |
From: Pablo Halpern (phalpernworld.std.com) | |
Date: Wed, 19 Apr 95 11:04 CDT |
> From: mac [at] happyvalley.com (Mac Thomson) > > Pablo, you state that in the case of selling completed houses rather than > lots, "We rely on the developer's ability (we are the developer, in this > case) to sell larger, more expensive units at a smaller land cost/final co > ratio than the smaller, less expensive units." But this land cost/final c > ratio is *always* going to be smaller for more expensive houses given tha > the land costs are the same. This holds true for houses built individuall > upon purchased lots as well as purchased completed houses. To illustrate > using your example: > > Land (& Common Fac) House Total Land/ Total Cost Ratio > $100K $120 $220 45% > $100K $80 $180 56 > $100K $60 $160 63 Yes, that is true. I should have refered to the *market value* of the house instead of its *final cost*. The market value for large houses have an *even lower* land cost/market value ratio than the above numbers indicate. The house that cost $120K + $100K to build may have a market value of $250, not the $220 number above. The house that cost $60K + $100K to build, may have a market value of only $140K, which is less than the $160K total cost. Selling the $250K-valued house for only $220K would be a value for the buyer. Selling the $140K-valued house for $160K could price the smaller house out of range. > Do you feel that they're "getting shafted" because the $160K smaller house > "way above market rate for such a small house"? That could be because th > market doesn't demand a small house on such expensive land. To the market > cheap house and expensive land may be a bit of an incongruous package. > Subsidizing may be the only way to bring the cheap house in line with mark > rate, but this strategy should be openly recognized and accepted by the wh > group, especially those in the large houses who are going to be paying th > premiums to subsidize those in the small houses. Exactly, although the "premiums" may not be more than the regular premium of dealing with a developer trying to make a profit. In our case, we use that "profit" to "subsidize" the cheaper houses. Our group, and I suspect others, had a couple of goals that were hard to reconcile. One was to find pretty land in a town with good schools within a 40 min non-rush-hour drive from Boston. The other was to be affordable to the people in the group. After a year of frustrating land searches, the best we could find was an expensive piece of land that met the first goal. We took advantage of these "developer economies" to meet the second goal (barely). As a result, nobody is getting a bargain, but we will have a more economically-diverse group because of it. With economic diversity also comes the possibility for age diversity, family-size diversity, and ethnic diversity. It may be more fair, by some definition, to split the land cost evenly, but you have to look at what you're giving up. If your land, infrastructure and permitting costs are not high, you may not have to give up anything. In our case, we had to compromise. I hope this is clearer. - Pablo ------------------------------------------------------------------------ Pablo Halpern (508) 435-5274 phalpern [at] world.std.com New View Neighborhood Development, Acton, MA, U.S.A. ------------------------------------------------------------------------
- Lot Development Model, (continued)
- Lot Development Model Cohomag, April 13 1995
- Re: Lot Development Model Pablo Halpern, April 14 1995
- Re: Lot Development Model BPaiss, April 14 1995
- Re: Re: Lot Development Model Rob Sandelin, April 17 1995
- Re: Lot Development Model Pablo Halpern, April 19 1995
- Re:lot development model Lynn Nadeau, April 11 2002
- Lot development model Nicole Lorsong, July 18 2010
- Re: Lot development model Lynn Nadeau / Maraiah, July 18 2010
Results generated by Tiger Technologies Web hosting using MHonArc.