It's Actually Good News
Sat in on a SF ULI Panel yesterday morning on gaining traction in the NorCal residential development sector. This industry sector is still trying to sell into an ever dropping value market--absolutely the reverse of 2005. Economics and sales tactics are now more akin to the used car business than the real estate business. VELOCITY is the key principle.
Housing price declines appear to have stopped accelerating--stabilizing at a rate of decline of 20% per year. The good news is that it looks like we are approaching a trough. Bad news is that peak to trough is expected to be about ~40%. Yowza.
Pulling the levers to achieve a 40% reduction in housing costs means that residual land value is negative. Brother, can you spare some dirt?
Most interesting points made were about what is working today.
The panelists had kicked the print advertising addiction--their two best friends were now signage and social networking. They are starting to leverage the value of social networking--but at what price do your friends consider you smart when buying that condo? And those broker open houses with the free trips to Hawaii? Fuhgeddaboudit.
Is it time to start buying hard assets?
