NorCal: 2005… Are we there yet?

It wasn’t that long ago when it seemed like the residential land market would never leave the cellar.  Amazingly, it seems that someone flicked a switch and land prices are surging to what seem like pricing we saw at the height of the market in 2005.

We are not there yet, but getting close.  How can this be when it seems like new home pricing and the re-sale market are still a good 30-40% below peak pricing?  With the sub-contractor trades still aggressively competing for work and construction materials that remain readily available at fair market pricing, the cost savings from the builders fall directly to the land.

I think it won’t be long before we see the associated trade and construction costs begin to rise and we see a plateau in land pricing.  Land owners need to catch the wave and enjoy the ride.

2005 vs 2012 Market Price Line

Source: Ryan Long, Senior Marketing Consultant, (916) 784-3329 ext. 16

SACRAMENTO EMPLOYMENT NUMBERS GETTING BETTER

Now that the election is over, everyone in the homebuilding industry can take a collective deep breath and get back to work.  In spite of our worst fears about policy failures, taxes and over regulation, new homes are selling in the region and selling well.  Even before the election, anxiety over the housing market seemed to be subsiding while confidence growing.  There are many factors including supply shortages, interest rates, and relative affordability but most notable, have been  the employment numbers for the Sacramento region.  They have finally dipped below the double digit level and it has provided a boost for the region so severely squashed by the residential market downturn.  If the trend continues on the employment side, look for positive growth in new housing no matter what our government looks like.

http://www.bizjournals.com/sacramento/news/2012/10/19/area-unemployment-dips-single-digits.html

http://www.bizjournals.com/sacramento/blog/sanford-nax/2012/10/job-market-improves-in-some-professions.html

http://www.builderonline.com/legislation/what-obamas-re-election-means-for-housing.aspx?utm_source=newsletter&utm_content=jump&utm_medium=email&utm_campaign=BBU_110812&day=2012-11-08

Source: Jim Radler, Senior Marketing Consultant, (916) 784-3329 ext. 11