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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: XoFruitCake who wrote (59202)	8/5/2006 8:36:34 PM
From: Don Earl	Read Replies (3) \| Respond to of 306849

RE: "since you mentioned that you have not price cement for a couple years, I take it that you did not build the last couple years" No. I just haven't poured any concrete since about two years ago when I was working on the foundation. The main drawback in being a one man construction crew is it takes a bit of time to finish a project. There's no way one guy can match the speed of a crew of 4-6 guys. What takes a construction outfit 4-6 months to complete, takes me around 1 1/2-2 years to do. That works out okay as I live in the previous house while building the new one, and get the two year capital gains break in the process. It's not something likely to attract anyone looking for easy money, but if you're not afraid of a little hard work, and can drive a nail without causing yourself harm, a fellow can do okay at it. RE: "I listened to at least 6-8 HB conference call every Q since 1Q 05, everyone is complaining about the raising cost especially after Katrina and Rita. Both from the labor to cement to lumber. Why wouldn't as a small builder be affected?" I am, which is about where the conversation started a few days back. I was trying to point out that a big part of the bubble hype had more to do with rising costs than bubble economics. "in 04... So you should be building like crazy back then?" Yep, I was in the middle of my most recently completed project at the time, and sold my last house about a year ago. At present I'm more or less on the sidelines waiting to see which way the wind blows. The good bargains on land have been pretty well chewed up since the last time I was shopping for a lot, and building materials are more volatile than Internet stocks in the late 90s. I'm in what I see as kind of a destination market for retirees, which hopefully should allow me some extra time cushion even if the market cools off. To a certain extent it might be fair to say costs are starting to price the little guys out of the market, or at least add an element of risk that wasn't there a few years ago. I suspect that's why a lot of builders are shifting more toward the lower end of the market rather than the upper middle. There's always a market for so called "affordable housing", but I'm not real crazy about living in a cracker box for two years to get the capital gains break, and, owner builders are limited on how soon or often they can turn the homes they build. If I was twenty years younger, I'd probably consider jumping through the hoops to get a contractor's license, and look for an area with cheap lots where I could knock out a bunch of 1200 sf two bedroom one bath shacks. One guy could whip something like that out in 6-8 months and you could cut that in half with a partner. When some goof at Rooter's says the median price of new homes has dropped, that's basically what they're describing. The big outfits have priced the little guys out of the higher end of the market, so the little guys target the market where the big guys can't go in on thin margins and make meaningful amounts of money. One project I saw locally along those lines, the builder knocked out half a dozen little bitty 1 bedroom, 600 sf dumps all bunched together on postage stamp sized lots. Woops, there goes the median, but it doesn't mean the price of comparables has gone down.