Housing Giants - September 10, 2008 - (Page 18) m&a Michael P. Kahn, Michael P. Kahn & Associates Land Light: aim to EmuLatE thE nVR modEL ‘Just-in-time’ theories can help you stay the course It Is very clear to me that once we’re back to a more normal market environment the NVR Model will be the model most, if not all, builders will try to emulate. Best described, “The NVR Model” is the equivalent of “just-in-time” now fully subscribed to by manufacturers throughout the world: required parts show up just in time to be used. Builders, especially those in markets where option lots have traditionally been readily available such as in Houston and Dallas, have already been applying at least parts of the NVR model. However, between 1995 and 2005, because demand for lots were strong and it was a seller’s market, builders were forced to take down a significant number of lots at a time and hold them. In its purest form, the NVR model permits the builder to take down the lot required when the building permit is issued and construction is to begin. It is equally clear that Centex and Lennar as well as many other builders have sold off substantial quantities of finished, partially finished, platted and even entitled lots to adjust their lot pipelines to today’s reduced lot requirements. Lot pipelines that were assumed to be a five-year supply of lots became supply of 10 years or more. Their goal appears to be as “land light” as possible, and over time, move as close as possible to the NVR Model, which home building analysts hold up as the epitome of good lot management and control. Over the past 18 months I visited 36 18 HoUsING GIaNts.9.10.08 www.HoUsINGGIaNts.com http://www.Housinggiants.com
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