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Why Now is the Time to Invest in Land

Why Now is the Time to Invest in Land | Trends in Land Development |

Why Now is the Time to Invest in Land


The time is now to purchase any remaining distressed real estate master planned communities. New home sales are climbing sharply. Inventory levels have fallen to the lowest on record. The amount of remaining finished lots particularly in Southern California is almost nonexistent, less than a few months supply.


Once the remaining finished lots are developed, there will be a sharp uptick in prices associated with the cost to improve new lots, and this must be reflected in higher home prices. Waiting any longer to jump into the remaining distressed market means those few deals left, will have either already been purchased and/or those that are still available, will be at higher prices, consequently taking out much of the potential profits that are made when you buy a property correctly.


The Market is Recovering.


This timing is further confirmed by the recent jump in public home builder stocks. Waiting, even just a few months, could be too late.


In July, sales of newly built homes were up 26% from the same month last year,[i] with sales of existing homes up 10.4%.[ii] Inventory of new homes available for sale fell to “the lowest level since the government started tracking the figure in 1963”,[iii] while inventory of existing homes dropped from a 9.3 to a 6.4 month supply.[iv] With this pronounced inventory shortage, the median price for existing homes in the West jumped 24.5% over that same period,[v] while prices of previously owned homes across the United States rose 1.8% in the second quarter of 2012—“the biggest quarterly jump in more than six years.”[vi] In that same quarter, the S&P/Case-Shiller national home price index climbed 6.9%, with two other key indices in the report (the 20-city and 10-city) also showing significant gains.[vii]


A Bloomberg News article written by John Gittelsohn August 26, 2012 titled, "Homebuilding Revival Sparks Rush for Best California Land" [viii] states Guy Asaro, president of Mc.Millin Homes LLC, bought three land parcels in Texas this year while coming up empty in the San Diego area, where the closely held builder is based.


Ready-to-build lots around San Antonio, where McMillin has constructed houses since 2005, cost $55,000 to $70,000, or as little as one-sixth the going price in San Diego, Asaro said. He keeps searching in California, the most populous state, because a little land in the right place can yield a big return. “In Texas, land is like lumber—something to build a house for somebody to live in,” Asaro said in a telephone interview.


“In California, the land is what’s valuable. The house is just how you monetize it.”


The nascent recovery in new-home sales has U.S. builders rushing to buy up a diminishing supply of well-located, ready-for-construction land. They added more than 18,000 lots during their most recent quarter, the biggest gain since their inventory hit a nadir in the fourth quarter of 2009, according to data compiled by Bloomberg Industries. Demand is becoming so overheated in areas such as coastal California that developers are forced to pay more or shop in less-favorable markets.


Around the California coast, where the technology and health-care industries are fueling job gains, plots are selling faster than developers can prepare the dirt. The supply of finished lots—which have permits, streets and water and power lines, enabling construction—will fall to zero within a year in San Diego, Orange County, and San Jose, said the Concord Group, a Newport Beach-based consulting firm.


“We’re running out of inventory,” Richard Gollis, a Concord Group principal, said by phone.


U.S. new-home sales rose in July to an annual pace of 372,000, up 25 percent from a year earlier and the fastest since April 2010, the Commerce Department reported last week. Land prices probably will climb an average of 5 percent this year and next, faster than home values, according to Paul Diggle, property economist for Capital Economics Ltd. in London. “We expect the early stages of recovery to be characterized by demand for land that can be relatively easily developed and which is within a reasonable commuting distance of downtowns,” Diggle said in an e-mail.


California payrolls increased by 25,200 positions in July, the most of any state, the U.S. Bureau of Labor Statistics reported on August 17, 2012. The unemployment rate in the 10 largest cities varied from a low of 7.3 percent in the San Francisco-Silicon Valley area to a high of 14.7 percent in Fresno, in central California, according to the state Employment Development Department.


Lot shortages are also looming in and near Seattle; Raleigh, North Carolina; and Washington, D.C., where job growth has outpaced the addition of home sites, Gollis said.


In Phoenix, where 48,500 jobs were added in the 12 months through July, prices for finished plots in desirable areas have tripled since 2010, said Nate Nathan, a Scottsdale, Arizona-based land broker. He completed two deals in the Phoenix area this month, totaling $54.5 million for 1,061 lots.

“This market is on fire,” he said in an interview.


Permit applications for new U.S. homes climbed last month to an annual rate of 812,000, the most in almost four years, according to the Commerce Department. While that’s up 30 percent from July 2011, housing construction must reach an annual pace of about 1.2 million to accommodate population growth, said Mark Kiesel, managing director for Pacific Investment Management Co. in Newport Beach.


“New inventories are at 50-year lows,” he said during an August 14 interview on Bloomberg Television. “Housing starts are really half of what the long-term average is.”


In the San Francisco Bay area, the median home price jumped 13 percent in July from a year earlier to the highest level in almost four years, according to DataQuick. The increase was 8.1 percent in Southern California, the San Diego-based information company said.


Even some inland areas are starting to experience rising demand for lots, said Layne Marceau, Northern California division president for closely held builder Shea Homes L.P. Shea manages development of Mountain House, a planned community for 15,000 home 58 miles (93 kilometers) east of San Francisco. The California Public Employees’ Retirement System wrote down its $1.12 billion investment in the project to $96.8 million as land values plunged, according the fund’s 2011 annual report.

This month, builders agreed to buy almost 300 finished lots in Mountain House, at prices 50 percent higher than a year ago, Marceau said.


“They’re paying today for projected forecasted future inflation,” he said in an interview. “It’s been amazing.”


In San Diego, well-capitalized public builders such as Lennar Corp. (LEN) are driving up land prices well beyond the reach of smaller competitors, said Bill Davidson, president of Davidson Communities, a closely held builder based in Del Mar, California. Lennar recently outbid him for a 10-lot parcel near San Diego, a property so small that large builders would have ignored it a few years ago, he said.

“They’re here with a vengeance,” Davidson, whose company has built 5,000 homes since 1978, said in a phone interview. “I’ve seen land prices go up 50 percent.”


Lennar, the third-largest U.S. homebuilder by revenue, spent $287 million on land and lots in its most recent quarter, a 74 percent increase from a year earlier, according to President Richard Beckwitt.

“We continued to acquire great deals in Florida and Texas, but invested more heavily in some extremely high-margin opportunities in California and the Mid-Atlantic,” Beckwitt said on Lennar’s June 27 earnings conference call. Lennar declined to comment further, said Allison Bober, a spokeswoman for the Miami-based builder.


Toll Brothers, Inc (TOL), the largest U.S. luxury-home builder, agreed in May to pay about $110 million for half of an Orange County subdivision with permits to build 1,780 single-family homes and 414 apartments. The Horsham, Pennsylvania-based company is raising prices for its California homes because demand is so strong, Chief Executive Officer Douglas Yearley Jr. said on an Aug. 22 earnings conference call. “Silicon Valley: hot,” Yearley said as he ranked California’s markets. “We just wish we had more. San Francisco: strong. Coastal Southern California, Orange County and northern San Diego County: very strong.”


D.R. Horton Inc. (DHI), the largest builder by volume, spent $938 million on land in the first three quarters of its fiscal year, up from $582 million a year earlier. While recent deals boosted the Fort Worth, Texas-based builder’s nationwide lot count to more than 130,000, the most since mid-2008, little of the new land was in California because prices seemed “overheated,” CEO Donald Tomnitz said.


Developers preparing California land for construction face an approval process that delays projects and pushes up costs. Newhall Ranch, a master-planned community north of Los Angeles, received initial county approval in 1998 for 20,000 homes. Its developer, Aliso Viejo, California-based FivePoint Communities Inc., doesn’t expect to break ground until next year, after delays caused by litigation and a 2009 financial restructuring, CEO Emile Haddad said.


“The barriers to entry are so lengthy and complicated, it makes the supply limited,” Haddad said in a phone interview. “Unless you’re working on deals and entitlements today, you’re going to miss the next cycle.”


Builders are required to foot the bill for infrastructure development, further driving up land costs. FivePoint is in talks to pay $1.2 billion for parkland, roadways and schools for the right to construct as many as 10,700 homes at the former El Toro Marine Corps Air Station in Orange County.

California’s “not expensive because everybody’s running to buy land, but because it’s an expensive place to do business by a wide margin,” he said. “It takes three to five to 10 years to get a project approved.”


Lots at Newland’s Cinco Ranch, a 12,000-home master-planned community outside Houston, cost about $65,000, compared with more than $338,000 for similar properties at the company’s 4S Ranch north of San Diego, McLeod said.


Builders pay a premium for California land with the expectation of wider profit margins, Asaro of McMillin said. His company, which sold 456 homes last year, lists a 2,800-square-foot (260-square-meter) house in San Diego for $459,900, compared with $246,900 for a similar property in Texas.


KB Home (KBH) sold its average California hosue for $402,000 in its most recent quarter, a 32 percent jump from a year earlier. That compared with an average of $163,700 for homes in its central region of Texas and Colorado, where prices dropped 7.7 percent, the Los Angeles-based builder said.

Those price differences will increase as California lots become more scarce, Asaro said.


“I see immense price pressure here in the next couple years,” said Asaro, this year’s chairman of the Building Industry Association of San Diego. “It’s going to be very hard to meet the upcoming demand.


The future of homebuilding is where people are and people are where jobs are.”


The Time is Now.



Strategic Land Partners LP seeks out hard-to-find land and development opportunities that only the most discerning experts can identify. These under the radar deals allow us to implement innovative and cutting edge best practices that promote more efficient, effective and sustainable land and yield significantly higher returns on the capital invested. Investments typically involve the purchase of assets at a significant discount to replacement cost.

James M. Kozak is President of Strategic Land Partners LP. You can reach him at: or the company web site:



[i] Whelan, R. (2012, August 24). Sales of new homes climb sharply. The Wall Street Journal. Retrieved from

[ii] National Association of Realtors. (2012, August 22). Existing-home sales improve in July, prices continue to rise. Retrieved from

[iii] Whelan, R.

[iv] Whelan, R.

[v] National Association of Realtors.

[vi] Whelan, R.

[vii] Christie, L. (2012, August 28). Home prices signal recovery may be here. CNNMoney. Retrieved from

[viii] Gittelsohn, J. (2012, August 27). Homebuilding revival sparks rush for best California land. Bloomberg. Retrieved from

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9 Signs the Housing Market is Turning Around

9 Signs the Housing Market is Turning Around | Trends in Land Development |

9 Signs the Housing Market is Turning Around


Associate Editor Jeff Zagoudis of the Housing Zone summarized JP Morgan CEO Jamie Dimon's optimistic outlook on the housing market in Dimon's recent annual letter to investors.


The existing supply of single-family homes and condos has decreased from 4.4 million units in May 2007 to 2.7 million today, one sign offered by JP Morgan CEO Jamie Dimon that the housing market has reached a turning point.


In his annual letter to investors, JP Morgan CEO Jamie Dimon offered an optimistic outlook on the housing market for 2012. Despite the continuing trend of low home prices and an excess of homes in delinquency or foreclosure that are still not on the market, Dimon offers these nine indicators, as reported by Business Insider, that things are starting to turn around:


1. The U.S. population has grown by 3 million people per year since the housing crisis kicked off four years ago. He projects additional growth of 30 million people over the next decade.


2. At that growth rate, there would typically be a need for 1.2 million additional housing units. Over the last four years, that demand has been cut by about half; as job conditions improve, the other half of that demand is expected to return.


3. There has been slow employment growth over the last two years, with 3.45 million jobs added in that span.


4. A surplus of housing — thanks to the creation of 845,000 new housing units annually over the last four years versus the destruction of just 250,000 a year in that same period (via demolition, disaster and dilapidation) — will be scooped up as these new households are created.


5. Since May 2007, the existing supply of single-family homes and condos for sale has been cut almost in half, from 4.4 million units at that time to 2.7 million today.


6. The inventory of homes with loans in delinquency or foreclosure has also decreased over the last few years. At the peak of the trend in 2009, 5.1 million homes were in this category; at present, the number sits at 3.9 million. Dimon predicts that number will continue to drop as more investors continue to buy distressed units and rent them out.


7. In half of the housing markets across the U.S., it is currently cheaper for potential homeowners to buy than to rent — a condition not seen in more than 15 years — thanks to ever-growing rental rates.


8. The household debt service ratio — which compares mortgage plus consumer debt payments to disposable personal income — is at its lowest level since the mid-1990s.


9. Recent senior loan officer surveys by the Federal Reserve show that, while there are not yet clear signs of credit loosening for new mortgages, at least the rush to tighten mortgage lending standards has abated. Over the last two years, $2 trillion of mortgages have been refinanced, substantially aiding homeowner burdens. Dimon expects another $2 trillion to refinance over the next two years, with approximately 10% coming from recently announced government programs, and, at that point, we estimate that only 15%-20% of Americans will be paying interest rates over 6%.


More jobs, more households, more Americans, good value – it’s just a matter of time.


Strategic Land Partners LP seeks out hard-to-find land and development opportunities that only the most discerning experts can identify. These under the radar deals allow us to implement innovative and cutting edge best practices that promote more efficient, effective and sustainable land and yield significantly higher returns on the capital invested. Investments typically involve the purchase of assets at a significant discount to replacement cost.


James M. Kozak is President of Strategic Land Partners. You can reach him at: or the company web site:

Todd Key, Senior Land Advisor's comment, April 24, 2012 10:02 AM
I would not be inclined to consult with Mr. Dimon on the health of the housing industry. I doubt he would be capable of getting through the Short Sale process, that appears to be getting more cumbersome. The reality is, there is still a huge backlog of defaulted loans and foreclosures. You can buy a single family home, in most areas of the country for less than the sticks and bricks construction cost. Foreget the cost of the land and the bloated building and impact fees. Employment is a joke, we are not keeping up with new workers entering the workforce, much less regaining jobs lost. The only explanation for the drop in unemployment rate is due to people exhausting their benefits and dropping off the roles.
I would say the best case scenario for housing is that it may have stopped falling. The worst case scenario is another round of foreclosures, falling home values, leading to more foreclosures, and extending the mortgage crisis by years.
Todd A. Key
Sr. Land Advisor
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The Economic Downturn Impact on Boomers-The Boomer Values Realignment Study

The Economic Downturn Impact on Boomers-The Boomer Values Realignment Study | Trends in Land Development |

The Boomer Values Realignment Study


Civano Living collaborated with Ypartnership and American LIVES, thought-leaders in their respective fields of travel and leisure and housing, to conduct a comprehensive, statistically valid, national study- The Boomer Values Realignment Study.


This study was conducted in an effort to measure the long-term psychological impact the economic downturn has had on people between ages 45 and 65 and how recent events affect their attitudes and spending habits.


1. Has the Boomer been jolted enough by recent economic events that it has impacted their world view, values, attitudes and lifestyle?;


2. If so, are these long lasting modifications that will impact consumer spending habits after an economic rebound?;


3. How will these spending patterns affect the resort real estate & hotel industries?;


4. If there is a New Normal, what is it and where are the business opportunities within these realigned values and emerging market niches ?




Among Baby Boomers between the ages of 45-65 there are profound and complicated layers of distress and concern over the state of affairs in America and with the economy.


This current economic and social environment is impacting the vast majority of Boomers in the U.S.


• 91% agree they are experiencing “not such good times.”

• 97% describe the state of the nation’s economy as “poor” to “not so good.”


Many Boomers (within all income groups surveyed) are showing an increased interest in values-related consumer categories such as wellbeing and sustainability. They are reaching a tipping point in their lives.


This shift has occurred due to the combined effect of an aging Baby Boomer population, impact of an emerging global economy and historic financial crisis at home and abroad. Our target group’s movement toward life purpose, reprioritization and values beyond careers is emerging anyway but has been accelerated or exacerbated due to the recession and global events.


To read the entire report, you can visit the respective websites of Civano Living; or Ypartnership and or American LIVES.


Or click on the link here:


Strategic Land Partners has an uncommon ability to discover, discern and create opportunity —and we tenaciously apply that ability every day. We live and breathe the land investment and development business, and have done so for decades. As such, we have a superior understanding of the business and the "winds of change" that are reshaping it.


We constantly strive to out-think, out-research and out-know our bring a diversity of quantitative and qualitative skills to bear in our be global in our thinking...and with our extensive network of contacts and our ability to execute a customized strategy for each project in its unique locale, all resulting in value-added returns to our partners.


Strategically, we seek out hard-to-find opportunities that only the most discerning experts can identify. These under the radar deals allow us to implement innovative and cutting edge best practices that promote more efficient, effective and sustainable land use which yields higher returns. Investments typically involve the purchase of assets at a significant discount to replacement cost and/or the development to a higher use.


James M. Kozak is President of Strategic Land Partners. You can reach him at: or the company web site:

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An Apple Tree Grows in Suburbia

An Apple Tree Grows in Suburbia | Trends in Land Development |

SEPTEMBER 12, 2011


An Apple Tree Grows in Suburbia

The hot trend in the suburbs is to mix homes and agriculture




The hot amenity now? Salad greens.


In a movement propelled by environmental concern, nostalgia for a simpler life and a dollop of marketing savvy, developers are increasingly laying out their cul-de-sacs around organic farms, cattle ranches, vineyards and other agricultural ventures. They're betting that buyers will pay a premium for views of heirloom tomatoes—and that the farms can provide a steady stream of revenue, while cutting the cost of landscaping upkeep.


Forget multimillion-dollar recreation centers—"our amenities are watching the cows graze and the leaves change," says Joe Barnes, development principal for Bundoran Farm, a 2,300-acre development set amid apple orchards and cattle pastures outside Charlottesville, Va.


To be sure, the shaky economy has taken a toll on some of these developments, including Bundoran Farms, where the developers are moving ahead with new financial backers after a co-owner of the acreage went into foreclosure. Still, Bundoran's developers say they have sold 19 lots, which run from about $250,000 to more than $1 million, in the past 10 months. And new communities centered on agricultural development are in various stages of planning and construction in cities from coast to coast, including South Burlington, Vt., Hayes, Va., Boise, Idaho, and Stockton, Calif.


"Agriculture is the new golf," says Ed McMahon, a senior resident fellow at the Urban Land Institute, a nonprofit group focused on land-use planning.


A Fresh Hook

There are three basic models for incorporating agriculture into suburbia. The most straightforward is to set aside land for a farm, orchard or vineyard within the community. Such ventures may be run by an independent contractor who leases the land, or by salaried farmers who work for the developer. A second model creates community gardens—tilled, irrigated and ready for planting—throughout the development. Residents can claim a plot and get their hands dirty. Or new-home buyers might be might be offered a choice of irrigation systems and planter boxes that would allow them to turn their own yards into mini-farms. A final model involves creating edible landscaping throughout common spaces—fruit and nut trees, berry bushes, cabbage and lettuce—and allowing residents to pick whatever they can use. Many of the new developments incorporate more than one of these visions.


Developments Look to Agriculture


Houses near wetlands and a pond at Prairie Crossing.

The trend has its roots in the growing distaste for prototypical suburban sprawl: mile after mile of look-alike homes broken up by the occasional park. The sustainability movement, with its emphasis on conservation, preservation and local food production, has helped, too. Then there's the fact that the U.S. already has thousands of golf-course communities, so developers looking to set their subdivisions apart need a new marketing hook.


"We're not trying to be suburbia," says Harold Smethills, a principal of Sterling Ranch, a planned development southwest of Denver that will feature a 4-H livestock ranch and hundreds of acres of community gardens.

Mr. Smethills has banned traditional lawns in Sterling Ranch, calling them a waste of water and land. Instead, residents will be able to pick from among several landscape options, most of which emphasize agricultural production. Homeowners might turn their backyard into a "salsa garden," for instance, growing jalapeños, tomatoes and cilantro in redwood planters. Or they might grow herbs or potatoes, honeydew melon or artichokes.


That lifestyle appeals immensely to Elsa Fluss, a mother of two who hopes to buy in Sterling Ranch. "I know my kids will know computers, technology—all those things they're growing up with," Ms. Fluss says. "I also want them to know working with their hands."


Suburban Edens, however, aren't always easy to build.


Paige Witherington lives in Serenbe near Atlanta and manages the developer's farm

Zoning regulations often don't allow for homes side by side with working farms, so such developments may require additional hearings before planning boards. "It's critical to anticipate and plan in great detail," says Joe Runco, managing principal of SWA Group, a global planning and landscape-architecture firm that is working on farm-based communities, including Bishops Bay in Middleton, Wis., and the Preserve in Stockton, Calif. City officials may ask questions like, "If you've got trees full of apples and they're next to the high school, do those apples get eaten—or do they get thrown?" Mr. Runco says.

Once a project wins approval, the developers may have to subsidize the farm for several years before it becomes profitable.


And even true believers acknowledge that some potential buyers may be put off by a landscape more squash than sod. "There's a visual component to an edible landscape that hasn't been embraced fully by the public," says David Nelson, senior vice president of A.G. Spanos Cos., developer of the Preserve, the 1,800-acre farm-centered community in northern California. He says that the land will lie barren for parts of the year and that fields in full bloom can look unkempt, which can discomfit suburbanites used to manicured bluegrass. Other developers warn that smells and dust from farming can spark complaints from homeowners.


The complaints can come from the farmers, too: Paige Witherington, who grows vegetables on five acres inside a suburban Atlanta development, says she has had to chase away residents and tourists who saw nothing wrong with walking their dogs through her lettuce fields. "We had to put up a sign saying only farmers allowed beyond this point," she says.


The model for many of these developments is Prairie Crossing, a community built around a 100-acre organic farm in Grayslake, Ill., north of Chicago. When it was launched in 1992, the concept was so novel that Prairie Crossing didn't need a marketing budget; it coasted on free publicity generated by reporters who came to see this strange new suburb. In recent years, Prairie Crossing has morphed from oddity to inspiration. Its developers have fielded so many queries from firms considering similar projects that they organized a two-day seminar last fall.

"We've gone, to a certain extent, from being alone in the wilderness to being overwhelmed," says Mike Sands, who runs a foundation at Prairie Crossing dedicated to sustainable development.


Avocado-Lined Lanes


But some sustainability advocates say the new farm communities don't go far enough. Quint Redmond, a land planner in Golden, Colo., promotes a vision of what he calls "agriburbia," where suburbs aren't just built around a farm; they support food production at every turn.


Why not line streets with almond and avocado trees, he asks, or replace shrubbery with cabbage and currants? Golf courses could plant their roughs with kale and corn. Lawns—where they must exist—could be edged with chives and herbs.

Mr. Redmond maintains that many homeowners could earn half their mortgage payment by converting lawns into gardens and selling the bounty to restaurants or at farmers' markets. "Organic basil is like growing gold," he says. "You can net $26,000 an acre."


Serenbe, in Chattahoochee Hills, Ga., has adopted some of the "agriburbia" vision. In addition to an organic farm at the heart of the development, nearly 70% of the public landscaping in the latest Serenbe village also consists of edible species. "We walk down the street and grab blueberries off bushes," says homeowner Tom Reed. The challenge, he says, is "remembering to leave some for other people."


Ms. Simon is a staff reporter in The Wall Street Journal's Dallas bureau. She can be reached at


This article highlights a trend growing throughout the country as developers look for ways to make their communities greener and more sustainable.

James M. Kozak, President

5415 Oberlin Drive, Suite 100
San Diego, CA 92121

Phone:(858) 699-7440

Fax:(858) 523-0826

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California Consumers will Pay More for a Green-Labeled Energy Efficient Home

California Consumers will Pay More for a Green-Labeled Energy Efficient Home | Trends in Land Development |

California Consumers will Pay More for a Green-Labeled Energy Efficient Home


In a an article published in The Washington Post July 19, 2012 by Kenneth R. Harney titled “Study finds that energy-efficient homes often command higher prices”, Mr. Harney shares the statistics of a recent study of 1.6 million home transactions that took place between 2007 to 2012. Many in the home building industry have stated that during the recent down market, a builder can not get the premiums necessary to build an energy efficient home. You will see the data shared below, contradicts this theory and hopefully will provide momentum for builders to move forward with Green-Labeled Energy Efficient homes. The rest of Mr. Harney’s article is shown below:


It has been a controversial question in the home real estate market for years: Is there extra green when you buy green? Do houses with lots of energy-saving and sustainability features sell for more than houses without them? If so, by how much?


Some studies have shown that consumers’ willingness to pay more for Energy Star and other green-rated homes tends to diminish during tough economic times. Others have found that green-certified houses sell for at least a modest premium over similar but less-efficient homes.


But now a new study involving an unusually large sample of 1.6 million homes sold in California between 2007 and early 2012 has documented that, holding all other variables constant, a green certification label on a house adds an average of 9 percent to its selling value.

Researchers also found something they dubbed the “Prius effect”: Buyers in areas where consumer sentiment in support of conservation is relatively high — as measured by the percentage of hybrid-auto registrations in local Zip codes — are more willing to pay premiums for green-certified houses than buyers in areas where hybrid registrations are lower.


The study found no significant correlations between local utility rates — the varying charges per kilowatt-hour of electricity in different areas — and consumers’ willingness to pay premium prices for green-labeled homes. But it did find that in warmer parts of California, especially in the Central Valley, buyers are willing to pay more for the cost savings on energy that come with a green-rated property.


The research was conducted by Matthew E. Kahn, an economics professor at UCLA, and Nils Kok of Maastricht University in the Netherlands, currently a visiting scholar at the University of California at Berkeley. From their study’s 1.6 million home transactions, Kahn and Kok identified 4,321 dwellings that sold with Energy Star, LEED or GreenPoint Rated labels. They then ran analyses to determine how much green labeling contributed to the selling price, eliminating all other factors contained in the real estate records: locational effects, school districts, crime rates, time period of sale, views and amenities such as swimming pools.


Energy Star is a rating system jointly sponsored by the Department of Energy and the Environmental Protection Agency that is widely used in new home construction. It rewards designs that sharply reduce operational costs in heating, cooling and water use, and that improve indoor air quality. The LEED certification, created by the private nonprofit U.S. Green Building Council, focuses on what it calls “sustainable building and development practices.” Though more commonly seen in commercial development, it is also available as a rating for single-family homes. The GreenPoint Rated designation, created by a nonprofit group called Build It Green, is similar to LEED and can be used on newly constructed as well as existing homes.


The 9 percent average price premium for green-rated homes is roughly in line with studies conducted in Europe, where energy-efficiency labeling on news and resale houses is far more commonplace. Houses rated “A” under the European Union’s system commanded a 10 percent average premium in one study, while dwellings with poor ratings sold at discount.


Labeling in the United States is a politically sensitive real estate issue. The National Association of Realtors has lobbied Congress and federal agencies to thwart adoption of any form of mandatory labeling of existing houses, arguing that an abrupt move to adopt such a system could have severely negative effects. A loss of value at resale because of labeling would be disastrous, the association has argued, particularly coming out of a housing downturn in which owners across the country have lost trillions of dollars of equity since 2006.


The National Association of Home Builders, on the other hand, has enthusiastically embraced labeling as a selling advantage for new houses. Buyers of such homes today are far more likely than purchasers of resale homes to find them rated as energy-efficient and environmentally friendly.


Strategic Land Partners LP seeks out hard-to-find land and development opportunities that only the most discerning experts can identify. These under the radar deals allow us to implement innovative and cutting edge best practices that promote more efficient, effective and sustainable land and yield significantly higher returns on the capital invested. Investments typically involve the purchase of assets at a significant discount to replacement cost.


James M. Kozak is President of Strategic Land Partners LP. You can reach him at: or the company web site:

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National Home Builder Makes a Bold Move-

National Home Builder Makes a Bold Move- | Trends in Land Development |

National Home Builder Makes a Bold Move-


Jim Kozak, President of Strategic Land Partners LP states that in these challenging economic times, new home builders have worked diligently developing new designs and the use of construction materials and methods to cut their costs to construct new homes; the next opportunity for home builder’s to create value for their customers, is to make sure that their homes are less expensive to maintain and operate than the last generation of homes that were built. The article below outlines how KB Homes has effectively implemented this strategy. After strong initial buyer reaction, KB has expanded its program to make rooftop solar standard wherever feasible in Southern California. This will enable them to positively differentiate their product from the short sales and foreclosures that pop up in their market.


An Article published by Leslie Berkman , staff writer for The Press-Enterprise published November 18, 2011, states in a bold move to spur sales in an extremely weak new home market, KB Home starting today is tripling the number of communities in Southern California where rooftop solar systems come as standard with every house it sells.


KB Home is launching a program that makes solar systems an integral part of the houses it builds at 28 of its communities in Southern California. It is expanding upon the 10 communities where it began offering solar as standard in March. Included are a dozen KB Home communities in Riverside County and six in San Bernardino County.


KB is installing as standard four solar systems, ranging from a 1.8 kilowatt system with 8 panels that is expected to cut household electric utility bills by up to 40 percent to a 3.15 kilowatt system with 14 panels that is expected to cut electricity costs by up to 80 percent. KB’s initial standard system was smaller, offering an electricity cost savings of up to 20 percent.  Now each KB community will get as standard the biggest array of solar panels that will fit on the roofs of all of its homes.


Steve Ruffner, president of KB Home’s Southern California division, said KB is deepening its commitment to solar energy because sales in KB Home communities with solar as a standard feature have been 30 percent greater than in communities without it.


“Our sales have improved since we rolled out the standard solar promotion. We are very excited about this. It tells us the buyer understands it and wants it,” he said.

Ruffner said the company is making solar standard wherever feasible in Southern California, skipping only condominium complexes where homes share a common roof and communities that are nearly built out.


KB also decided to install larger solar arrays as standard because a majority of home buyers chose to upgrade. They will be able to recoup most of the cost of the upgrades by claiming a federal tax credit of 30 percent of their new solar system’s retail value, said Ruffner.  KB says it is making solar standard at entire communities, rather than offering it as an option, to achieve economies of scale on costs like materials and installation and to streamline the government permitting process.


Ruffner said KB’s Southern California division entered into an agreement with SunPower Inc. to buy 1,000 solar systems. “We got such a good deal that most of the communities will not have any price increase (on the homes) and some a minor price increase. It is not something the consumer will be concerned about,” he said.


Matt Brost, SunPower’s national sales director for new homes, said in the last 12 months he has seen a substantial pickup in the adoption of solar programs by home builders. He said some builders have felt compelled to go solar partly in response to KB Home, which he said is “making a big splash.”

“The commitment they (KB Home) have made is bigger than I think any builder has made to date and we expect it will create a big demand in the market,” he said.

Brost said while KB was not the first home builder to offer solar rooftop systems, “they found the key to success with it, how to market and sell with it.”


KB is smart in selling the advantages of solar to potential home buyers by showing how much money they will save on their utility bills rather than dwelling on the benefits for the environment that is achieved by reducing the need for fossil fuel-burning power plants, said Brost. “Whereas doing what is right for the environment appeals to a lot of people, whether because of concerns about global warming or attaining energy independence, the appeal of saving money is universal,” he said.


KB also says it is passing on to its customers a cost savings from the rebates that the state makes available to motivate home builders to install solar systems. Brost said SunPower on KB’s behalf applied to the California Energy Commission for rebates of $2.60 per watt of solar power production capacity.  The rebates and credits along with falling prices for solar panels and anticipated increases in utility rates make solar systems increasingly attractive to home builders, said Mark Boud, principal of Real Estate Economics, an Irvine-based consultant to KB and other major home builders.  Solar systems are valued by builders as a way to differentiate their homes from older bargain-priced resale homes like foreclosures and short sales.


Ruffner said a rooftop solar system when added to other energy conserving features in a new KB home renders that home up to 60 percent more energy efficient than the typical home that was built 10 years ago.


Still, installing rooftop solar as standard is not an easy choice for today’s home builders, said Robert Raymer, senior engineer and technical director for the California Building Industry Association. He said mortgage money is so tight that a builder who adds cost to a house runs the risk that potential buyers may not qualify for a mortgage.  “Down the road I see it (solar) becoming a trend. But for the short term most builders are looking for major cost cutting techniques,” Raymer said.


Ashly Gage, a 22-year-old waitress and student, said she and her husband, a 26-year-old Los Angeles County firefighter and paramedic, bought a KB Home in July in Eastvale that came with a six-panel solar energy system. She said because they were first-time buyers on a limited budget they decided not to upgrade for more sun power.


But Gage said the solar panels that came standard were an important buying incentive for the couple and “we wouldn’t trade them for anything.”

The final electric utility bill they got at the 1,400-square-foot town home they rented in Eastvale was $376 for the month of July. The next month, the first electric bill at the new 2,200-square-foot house they bought with a 1.4 kilowatt solar system was $132. “I was pleased to get that in the mail,” Gage said.


Strategic Land Partners LP seeks out hard-to-find land and development opportunities that only the most discerning experts can identify. These under the radar deals allow us to implement innovative and cutting edge best practices that promote more efficient, effective and sustainable land and yield significantly higher returns on the capital invested. Investments typically involve the purchase of assets at a significant discount to replacement cost.


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REAL ESTATE: Active Adult Communities Predicted to Grow

REAL ESTATE: Active Adult Communities Predicted to Grow | Trends in Land Development |

The recent article below by Leslie Berkman highlights a significant demograhic trend  we have all read about. Today's market conditions create a perfect opportunity to secure entitled property near  major markets to serve this growing demand sector as the economy starts improving.


REAL ESTATE: Active Adult Communities Predicted to Grow




Published: 21 October 2011 11:42 AM by the Press-Enterprise


Although an industry survey shows the sales rate in active adult communities have waned with the economy, the industry is optimistic that demand will grow with the expanding population of seniors, according to a report from the Newport Beach real estate consultant Meyers LLC .

Among 29 active adult projects surveyed in Southern California in the first quarter of 2011, the quarterly sales rate averaged less than one home per month, which is far less than during the peak years when the average rate was closer to 20 sales per month, reported Meyers senior consultant Blayne Brinket. The National Association of Home Builders survey found that the difficulty acquiring financing was a major factor.


A bright spot is that according to the National Association of Home Builders homeowners aged 55 and older make up about 40 percent of the total housing market and that percentage is expected to grow to 42 percent by 2019. The trend particularly should be a boon in Inland Southern California where large master planned senior communities congregate more than on the coast because of the availability and lower cost of land for such amenities as golf courses.

Meyers estimated that based on economic forecasts and data from the Census Bureau, between 11,000 and 12,000 new homes will be demanded by buyers 55 and older in Southern California next year. Los Angeles will need the most at about 3,200 new homes for seniors, followed by the Inland Empire with a need for about 3,000 new homes.



Strategic Land Partners has an uncommon ability to discover, discern and create opportunity —and we tenaciously apply that ability every day. We live and breathe the land investment and development business, and have done so for decades. As such, we have a superior understanding of the business and the "winds of change" that are reshaping it. Strategically, we seek out hard-to-find opportunities that only the most discerning experts can identify. These under the radar deals allow us to implement innovative and cutting edge best practices that promote more efficient, effective and sustainable land use which yields higher returns. Investments typically involve the purchase of assets at a significant discount to replacement cost and/or the development to a higher use. Visit us at:


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