Jonathan S. Grebow
is president and CEO of Ridgewood Real Estate Parners in Florham Park, N.J.
Yes. Builders are forgetting past excesses.
Since 2009, Ridgewood has been a residential real estate developer and investor specializing in land banking. The company acquires, develops, and sells residential and mixed-use communities across the United States.
While Grebow says his company has enjoyed “close relationships” with public and private builders, many of those same builders “have become our biggest competition for land” over the past year or so. Although the housing market is recovering, “we are very surprised that the nation’s largest builders are jumping back into land so quickly and aggressively,” he says.
Have they so quickly erased from their minds the recent recessionary period, asks Grebow, when Wall Street penalized the publics for stacking more land onto their balance sheets?
He also wonders why more builders, large and small, don’t avail themselves of land banks, which were set up to allow builders to remain asset light while increasing their returns on investment.
Ridgewood still seeks to provide builders the ability to purchase finished lots on a smaller, more manageable scale of either price or lot number. “We like to say ‘we buy wholesale and sell retail,’” Grebow says.
By purchasing larger, more expensive tracts, Ridgewood solves problems related to entitlement modifications or other development issues. “We utilize our skills,” which lets builders “concentrate on what they do best: building homes and providing customer service,” Grebow explains. “We believe that home builders prefer to pay a premium to purchase ready-to-build lots, which in this improving market benefits the developer’s bottom line.”
is president of Nathan & Associates, a land broker in Scottsdale, Ariz.
No. Builders have little choice.
When contacted in late February, Nathan half-joked that he’s sleeping a lot less these days because he’s been getting so many calls from builders. His company, which has exclusive listings on 250,000 lots in several western states, had sold 14,000 finished lots in the previous seven months.
Recent deals in greater Phoenix include selling 2,280.85 acres of a proposed 8,711-acre master planned community called Copper Mountain Ranch, and 153 finished lots and 101 preliminarily platted lots in the Mission Ranch community.
Builders have to buy land right now, according to Nathan, because in the Phoenix metropolis there are about 34,000 standard-size finished lots available, and 16,000 to 19,000 of those lots are expected to be absorbed by builders and developers by next spring. More than two-thirds of the 324 active subdivisions in Phoenix will be built out within the next year, he added.
Nathan has been through five housing downturns in his 37 years in the business, and has witnessed his share of real estate faux pas. But lately, he says he hasn’t “seen a stupid deal yet.”
Most prominent are joint-development agreements among “the eight or nine builders that are playing together in the sandbox, and are circumventing master planned developers who are competing with builders for the same dirt. ”
Indeed, Nathan said builders in the western states are “absolutely” resurrecting the development divisions again, and aren’t afraid to go after raw land, which is selling for $50,000 to $100,000 per acre. Prices for 6,000-square-foot finished lots are $55,000 to $75,000.
“All the land stress is gone, too,” he said, pointing to the 14 percent jump in home prices during the previous 12 months.
Learn more about markets featured in this article: Phoenix, AZ.