Stay cold and stay wet

Stay cold and stay wet

From here in the south

I follow the charts
Not stocks or investments
But weather in parts

I chuckle with glee

At the ice and the snow
As the people will think
They have nowhere to go

But they do, they have choices

The options are clear
Come down where it’s warm
Most times of the year.

But wait they will say

The timing has past
The prices are rising
The bargains won’t last

So they wait and they shovel

As the snow piles high
So close it near touches
The gray clouds in the sky

The excuses then mount

Little land left to build
The traffic is terrible
And the food is no good.

The same excuses were used

In recessions of past
The condo crash in the 70s
Overbuilt housing this last

But they miss one small point

Some things never change
Southern migration did slow
But will rebound just the same

As Florida is poised

To become the third state most populous
It replaces New York
That old staid metropolis

Where housing is expensive

And taxes are high
They will soon come to realize
As their days pass them by

That the bargains remain

You get more for your money
When you trade in up north
For the lands warm and sunny

And soon all will forget

The sales bust and the scare
As they swap out their rain boots
For shorts and swim wear

The masses will follow

As they read tweets from their friends
I haven’t shoveled snow in a year
I don’t even pretend

Sales and prices will rise

But no one will care
The market will dictate
What is just and is fair

So stay cold and stay wet

Watch the snow in the light
The next boom is coming
Soon all will be right.

Until next time…

Keep kicking the dirt!

Jeff Gersh is President of Gersh Consulting Services, a real estate advisory firm, headquartered in Orlando, FL.  He may be reached at jsgersh@gmail.com or 407-468-9328

 

 

Looking good from here

Looking good from here

I have been reading how, over the past few months, new home sales have been having 20+% increases since last year and how the pace of new single family home sales is now at an annualized rate of about 464,000 yearly sales.  Woo hoo, great news!  However, I wanted to evaluate this current increase and sales pace historically.  Coupled with my favorite web browser, I was able to visit the census.gov/construction website and review new home sales over the last 50 years. 

Interesting data on this chart.  We all know that new home sales peaked in 2005 when people had nothing better to do with their money than to bid up the prices and sales pace of new homes to the tune of 1.283 million single family homes that year.  Almost three times the pace of 2013.  We also know that the years 2000 – 2002 reflected a more stabilized price and sales pace for new home sales.  During that three year period, new home sales increased from 877,000 to 908,000 to 973,000 single family homes.  Looking at the current 2013 yearly increase with this historical lens, it is somewhat refreshing to know that we still have about 100% to go just to get back to the last normal pace of new home sales. 

To put an even greater perspective on the current sales pace, before the recent downturn, you have to go back to 1981 and 1982 to see absorption levels below 500,000, when they were at 436,000 and 412,000 new home sales, respectively.  Before that, you have to look to the years 1966 – 1970 when sales hovered between 450,000 and 480,000 homes.  I guess the free love period did not translate to buying a new home to find your own room.  Even going all the way back to 1963, there were 560,000 new single family homes being sold.

Let’s look at the current sales pace another way.  Assume no homes are sold in the 10 least populated states and that all 464,000 new home sales are just spread among the remaining 40 states (Sorry Wyoming, Alaska, Montana, the Dakotas et al. I need to make a point).  That means each of these 40 states only averaged 11,600 new home sales per year.  Or 967 homes per month, or 32 homes per day.  In Florida, the Villages alone, the top selling community in the US, sold over 3,400 homes this year.  Obviously, there is room here for national growth.

The point is, as the housing recovery continues, do not get caught up in talk that the new home sales pace will slow as interest rates and home prices continue to rise.  Barring a new unforeseen economic meltdown, this puppy is just starting to rev back up again.  I am not saying we are going to get back to 1.283 million new home sales again anytime soon.  However, there is a long way to go before we even begin to reach what should be a return to normal levels of stabilization.

Until next time…

Keep kicking the dirt!

Jeff Gersh is President of Gersh Consulting Services, a real estate advisory firm, headquartered in Orlando, FL.  He may be reached at jsgersh@gmail.com or 407-468-9328

 

 

Breaking up is hard to do

Breaking up is hard to do

Do you live on a golf course?  Would you like to?  Staring over manicured green fairways as your property abuts up to the course.  Or does it?

Let’s take a step back and review the development process of a golf course that meanders through a residential neighborhood.  During the planning process, you not only have single family lots and golf course acreage.  You also have HOA property that often acts as a buffer between the golf course and residential lots.  Typically, this little love triangle is not problematic when the original developer owns the lots, the golf course and controls the HOA.  The problem, though, comes into play when the developer chooses to sell the golf course. 

You see, a funny thing happens when the golf course is sold.  The buyer wants to actually know exactly what they are purchasing.  This is where the problems can occur.  Unless the lots clearly abut the out of bounds areas of the course, it can get confusing as to who owns what.  Are certain areas clearly marked as HOA lands?  If so, can they be easily accessed after the course is sold?  Are the plats clear as to ownership?  Has the survey been done correctly?  It sounds like a simple process.  However, I can tell you that it is one of those things that tend to slip through the cracks until various ownership groups come into play.  Are there any irrigation separation issues?  Have the golf course and HOA budgets clearly accounted for maintenance expense of the potentially disputed areas.  The list goes on.

In the end, the issue is typically resolved.  However, as with any dispute, there is usually some blood that is spilled on all sides.  As easy as it is to let this issue slip during the early years of a community development, it would serve all parties best interests to make sure that the appropriate time is spent after the golf course is complete to walk the course, identify what is golf course maintenance and what is HOA maintenance and to then make sure that the boundaries are adjusted and set as appropriate so that this issue does not spin out of control by the time the course is sold.  And, make no mistake, that course will be sold.  With few exceptions, developers do not like to be long term owners of golf courses for one very simple reason.  They rarely make any money!

Until next time…

Keep kicking the dirt!

Jeff Gersh is President of Gersh Consulting Services, a real estate advisory firm, headquartered in Orlando, FL.  He may be reached at jsgersh@gmail.com or 407-468-9328

 

 

Now you see it, now you don't

Now you see it, now you don’t

Diversity is a good thing, right?  Different views, cultures, a melting pot of ideas and innovation that creates a stronger whole.  This is especially true in community design and execution, where the mixing and matching of styles, colors and themes can add interest and desirability to a community.  Ok.  You know this is a set up. 

In planned communities, this whole concept falls short when talking about mulch.  Now, of all the aesthetic concerns regarding a master planned community, why, you ask, am I concerned with mulch?  The answer is simple.  It is visible.  Actually, if you start messing with different styles of mulch, it is very visible.

In a perfect mulch world, you typically don’t want to notice mulch.  You want to notice the trees and ornamentals, the color and varied styles of the plantings.  They add interest and desirability to a neighborhood.  However, once you start mixing different styles and colors of mulch to the mix, it suddenly seems to not work.  It seems off, like mixing stripes and plaids. 

The problem is that there are so many different choices for mulch.  Excuse me for a moment while I indulge my inner Forrest Gump.  There is pine bark, pine needles, cypress, wood chips, straw, river rock, lava rock, red mulch, brown mulch and so on.

In master planned communities, where homes are typically 10 to 15 feet apart, it just does not look good when different mulches are used among the homes.  It diverts the eye to something that is really meant to act as visual filler.  That does not mean that mulch styles cannot change in a community.  It just means that there needs to be a consistent application if a change is to be made.  It also does not mean that occasional exceptions are not warranted, such as using small amounts of color blended river rock in areas where wash outs may occur from rain sheeting through roof valleys.  However, as a whole, setting architectural guidelines requiring a consistent application of mulch is a visual win-win for most communities.

Real estate by nature is a very visual form of expression.  Most of the time, the focus is placed on the major elements such as elevations, amenities, entrance features and community landscaping.  However, it is important to not forget the smaller details, like mulch.  While much smaller in total dollars spent, these complimentary items often have the ability to make or break the visual integrity of a master planned community.  Like they say, the devil is in the details.

Until next time…

Keep kicking the dirt!

Jeff Gersh is President of Gersh Consulting Services, a real estate advisory firm, headquartered in Orlando, FL.  He may be reached at jsgersh@gmail.com or 407-468-9328