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

not just about need or even want. People have to be willing to invest in home ownership. “We’re under-selling nationally by about 500,000 homes a year,” Freedland says. “That should mean there’s a lot of pent-up demand. There’s going to be a flood of buyers someday, but nobody knows when or what the right product will be when that time comes. What they want when they’re willing to buy may be different than what they want now, which is what will show up in research done today.” Mollie Carmichael, senior vice president of Irvine, Calif.-based John Burns Real Estate Consulting, has done product research for Centex, Pulte and Lennar in California and Arizona. She says mid-rise and high-rise projects will be part of the mix when the market comes back and can be successful, but overbuilding is an ever-present danger — especially because it can take three years from project concept to completion. And a lot can change in three years, including the desires of fickle buyers. “What you have to remember is that everything about housing has to do with affordability,” Carmichael warns. “Midrise is a cool concept, but in many of the projects that have been done, a big component of cost (to the consumer) was missed,” he adds, pointing to association fees and amenities such as structured parking that add up. if not mid-Rise, wHat? Is there a housing product with the potential to excite buyers in the postrecovery era, with less danger of overbuilding? All signs point to highdensity detached houses. “Logic and finances say that’s what it will be,” says Carmichael, “but everything is driven by affordability, and this equation is very location-sensitive.” The great news about high-density detached homes is that you can build them for much lower costs than any midrise. And the insurance cost is lower because there are no fire-wall issues. Construction can be phased because the houses are still built one at a time, and consumers will pay a premium for a detached home even over a townhouse. “People still have more pride of ownership in a detached home,” says Carmichael, “irrespective of how small the yard is. Every study ever done shows that.” The bad news is that this is still a www.Housinggiants.com 9.24.08.Housing giants 23 http://www.realestateconsulting.com http://www.realestateconsulting.com http://www.centex.com http://www.pulte.com http://www.lennar.com http://www.housinggiants.com

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Housing Giants - September 24, 2008 Contents Viewpoint News & Moves Process Bandwagon Effect

Housing Giants - September 24, 2008

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