Cohousing-L Mailing List: Re: The "lot" development model

[Pablo Halpern (phalpern]

> From: mtracy [at] ix.netcom.com (Martin Tracy)
> 
> <Pablo and Martin continue a discussion on pricing the "lot" model>
>  
> Why is a $100,000 land price a "bargain" if you're going to build a $220,0
> home?  If you were going to build it outside of cohousing, the price of th
> (and development) wouldn't vary much with the price of the house, would it
> did Frank "pay less for his plot"?

Now we get the the heart of the matter. The price of the lot and deveopment 
*does* vary with the price of the house because ...  as a rule, people don't 
build expensive houses in poor neighborhoods where land is cheap and people 
don't (can't afford to) build cheap houses in rich neighborhoods where land 
is expensive. In a mixed-price development such as ours, we had to find some 
middle-ground and then make it work for those building inexpensive houses. 
Frank "pays less for his plot" because he is effectively building an 
expensive house in a mid-priced neighborhood. Maybe this is fair (he is 
giving up the advantages of being in a rich neighborhood) but it is not 
practical if we still want to include less-well-off families.

> If you separate the lot (plus development) price from the house price, cou
> you say that the $120,000 home was still subsidized by the profit from the
> $220,00 home, but that both had $100,000 lots?  Wouldn't the $120,000 home
> be a bargain?

No, you have to sell the $120K home (plus $100K common costs) for $250K, not 
for $220K. Otherwise there is no profit that can be used to subsidize the 
smaller houses. What portion of that $250K is for the land? What difference 
does it make? The important thing is that it is much harder to make a profit 
on building the house if the house is not built by the developer (us).

> I have a feeling I'm missing out on a much larger principle here...

To tell you the truth, we made decisions first and then figured out why they 
were necessary later. I would guess that most of the people in New View do 
not understand these principles. I have become more clear on them in the 
process of trying to explain them to cohousing-l.

- Pablo

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Pablo Halpern              (508) 435-5274         phalpern [at] world.std.com

New View Neighborhood Development, Acton, MA, U.S.A.
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