Housing Giants - June 23, 2008 - (Page 24)

feature land: buy or sell? The Land wITH All Of THe dIffIcUlTIeS facing the industry in this business climate, one of the most vexing is what to do about land holdings. In today’s environment, land can be more of a liability than an asset for home builders. Tracts of home sites will lie dormant until the housing market revives, which could take several years or more in many locations. Meanwhile, these properties incur finance charges and taxes on builders’ balance sheets. To build, builders obviously need land, but extensive holdings of undesirable properties threaten some companies’ very existence. Yet, for those who can raise the cash and afford to hold land assets for a few years, depressed prices may present a terrific opportunity to pick up property at bargain prices. 24 HOUSING GIANTS.6.23.08 Dilemm What is certain is that the residential construction slowdown has changed home builders’ business strategy regarding land. “What had been a twoyear supply of property in recent years may now be a five- or six-year supply,” says Derek Thomas, vice chairman and chief investment officer for Newland Communities, a privately owned residential and urban mixed-use community developer. Some of those lots, Thomas says, may be worth less than the debt owed upon them. The need To sell Given this challenge, the most logical strategy for most builders is to sell off lots that are unlikely to be developed in the foreseeable future. But with so many www.HOUSINGGIANTS.cOm http://www.newlandcommunities.com http://www.newlandcommunities.com http://www.housinggiants.com

Table of Contents Feed for the Digital Edition of Housing Giants - June 23, 2008

Housing Giants - June 23, 2008 Contents Viewpoint News and Moves Sell Workforce The Land Dilemma

Housing Giants - June 23, 2008

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