Friday, January 18, 2019

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In today's environment, mitigating risk and proper plat layout are of the utmost importance. The market price of homes SELLING can be worked backwards into the acquisition of land, developing lots, and appropriately pricing the lots from plat inception to meet the market for new construction homes. By taking the approach of the right mix of lot types and appropriate number of lots developed per phase, it leads to pre-sales prior to plat completion and limits carrying costs for the development group, which in turn leads to maximizing value.

New development has been my primary focus since 2009, when I got my real estate license. I have spent the past eight years working with landowners, developers, and builders, providing insight on both large and small development projects.

In 2016 I graduated with my MBA from the University of Iowa with an emphasis in Marketing and Data Analytics. This education has helped me better facilitate research in lot and land availability, sizing, pricing, and analyzing lot characteristics through quantifiable models. After a lot is built on, the quantifiable characteristics of the new homes are added to the models to determine market assumptions, which are then worked back into the land acquisition of future development projects. All of this information is put into a report which is then shared to put clients in the best possible position in the market.

It is clear that in today's market the most challenging issue is the shortage of affordable lots (< $50,000). In fact, finding mid-range lots (<$70,000) in the right areas is a challenge.  This is due to a number of factors, including high land costs, excessive city development fees, and the wrong types of lots being developed. Post-Recession, there was a plethora of high-end new construction buyers that had been sitting on the fence, waiting for the right time to purchase.  In turn, high-end lots ($85,000+) were developed to meet demand of the market at that time.  Most of these "on the fence buyers" have already made their purchases, yet lots have still been being developed to cater to that market. That needs to stop because there is a significant over-supply of these high-end lots, and the only answer will be to discount those lots to generate sales, which in turn will hurt developer returns and also give consumers "more lot" than what they actually need in their lot purchases.


 

 

Q1 2017 Properties for Sale

  • Allerton Park | Urbandale, Iowa - 14 Single Family lots available - Price:  $92,500 - $145,000
  • Autumn Ridge | Ankeny, Iowa - 31 Single Family lots available - Price:  $64,500 - $120,000
  • City of Des Moines Ground | Des Moines, Iowa - 14.14-acre Development parcel available - $308,000
  • Four Mile Four | Ankeny, Iowa - 3 acreage, Single Family lots available - Price:  $250,000 - $275,000
  • Fox Valley | West Des Moines, Iowa - 2 Single Family lots available - Price:  $65,000
  • Prairie Trail | Ankeny, Iowa - 97 Single Family lots available - Price:  $53,900 - $98,500
  • Woodhaven | Polk City, Iowa - 16 Single Family lots available - $55,000 - $120,000