Many people ask what inning we are in, but I think that’s the wrong sports metaphor. A better analogy is Formula One racing, where we’re about a third of the way around the track and the hairpin turn is coming up. If you go too fast, you might wipe out. Careful maneuvering will be the key to winning.

In 2010, some observers thought people were overpaying for lots and for raw land parcels, but those who bought during that period are glad they did. Now, there is again concern about the prices being paid for land and lots.

Regarding home prices, 2012 to 2013 has been a period of extremely rapid increases. If that was the straightaway, then what does the hairpin turn represent? Slower home price movement. The message:  don’t buy the land if it only “pencils” with a continuing and accelerating rate of price escalation.

Developers and builders that overpaid for lots and land will have a white-knuckle grip on the wheel for the next 18 months.

New-home prices have been increasing 10 percent to 15 percent annually in many markets, and as high as 20 percent to 25 percent within the same project. We’re already seeing builders cutting prices in markets where they got too ambitious in the first half of 2013. Builders are mostly offering promotional incentives, but some are actually cutting base prices. In 2014, I expect the rate of home-price escalation to be half as fast as in 2013. I see a wide range of same-project price increases possible in 2014—mostly from 3 percent to 6 percent, depending on the strength of the submarket and the maturity of the community and its amenities. This kind of thinking should be built into acquisition proformas.

Builders and developers are bidding against each other not only for “A” lots but “B” lots also are back to peak prices. Acquisitions personnel are admitting that they’re building in escalations to make the land buys pencil out (they were not willing to admit this 18 months ago).

Acquisition, development, and construction lending are starting to pick up again, particularly for developers with proven track records.