As home sales begin to climb in certain parts of Florida at noticeable and significant rates, builders for the first time in three years are planning to acquire new parcels. Our national builder clients in Florida are once again cautiously optimistic that the worst is over. They are now looking for sensible vacant land parcels where they can begin the process they virtually abandoned over 3 years ago. Home inventories are shrinking thanks to short sales, foreclosures, and increased selling. In addition, the luxury market is slowly improving due to great pricing opportunities. Banks are cautiously lending once again (including Jumbo mortgages at higher rates) and new buyers are visiting model home sites. As we advise our Florida clients on these land parcels, we cannot help but to visualize the affect of Florida's improving housing market on our northern neighbors.
Eventually, this bodes well for North Carolina, South Carolina, Georgia and Tennessee. These are echo states to Florida; meaning that Florida's real estate eventually has an affect on theirs. Thousands of sellers in Florida are anxious to move to these states as they sell their existing Florida homes. Floridians seeking a change in lifestyle and economics are looking northward. But a word of caution about this relatively new echo phenomenon. These buyers have faced a devaluation of their net worth with diminished home values and lower stock portfolios. Builders and developers in these echo states will see buyers with lower expectations looking for value and wishing to stay more liquid. Builders will need to be flexible on re-positioning their old yet-to-be-sold-out subdivisions or they will be left behind realizing slower sales and longer hold times.
However, the plethora of Floridians previously (pre-recession) looking to make this northern move will be somewhat smaller in numbers. Let's not forget Florida's awesome year round weather. Many parts of Florida have once again become affordable as a result of this recession. The panhandle especially. With the new international airport nearing completion in Panama City and with St.Joe Paper ready to begin developing its inland properties, this area will redirect some of those people previously committed to the mid Atlantic states. Other regions of Florida will also benefit by the new affordability and lower interest rates. However, Builders and Developers in all regions will need to factor in more strict bank approvals and more conservative appraisals.
In western North Carolina, where Edge has several clients, the market is actually slumping below 2008 levels this winter and spring. The summer season is nearing and we are optimistic improvement will start to show here when Floridians begin their annual summer trek to the Carolina's and surrounding states. But, builders should be ready for buyers wanting discounts, looking for deals and having less disposal cash than they did 3 years ago. FLEXIBILITY IS KEY THIS SUMMER. Be flexible on your pricing, downsize and be flexible on your home and home sites for sale, re-do and lower those HOA fees where possible and cherish every advertising dollar left in your original proforma. The resumption of the northern trek by this group of Floridians will be different than before. Those builders who are flexible in pricing and product will do well. The rest will be left in the dust. Let Edge help you plan for your future.
Monday, May 18, 2009
Monday, April 20, 2009
A Consultant’s input is valuable- before, during and after a Real Estate Cycle occurs. Consultants earn their keep by minimizing a firm’s overhead during typical Real Estate cycles. In the end Consultants are less expensive than typical employee overhead. But, consultants keep giving long after they first associate with their clients.
Beginning of a Cycle
Now (at the beginning of a Cycle) is the time when different ideas and new approaches are needed to set the stage for the successful long run ahead. Latest stories from around our industry are fairly predictable when it comes to builders and developer’s positioning themselves at the beginning of a new housing cycle. While many of the usual strategies are applied, there are a few twists emerging in this cycle that we are seeing nationally as builders/developers unveil the next generation of housing.
Many of the giant national builders and not so large building firms are introducing downsized new models while maintaining the same standard of interior luxuries as before. In addition, developers are minting smaller home sites. No surprises there. However different strategies are afoot to make homes “Green” and Energy efficient as never before. There is also the appearance that these new strategies as well as the tried and true strategies that worked in the past will last much further into the coming cycle. With more oversight ahead a noticeable change will be the consultant’s corporate role. They will provide better research, objective and creative marketing strategies, proforma realities and lender required oversight.
Because this has been such an evasive and deep recession touching so many sectors (financial, auto, housing, finance, travel, etc.) Americans are re-thinking their lives and their spending habits. Today’s Wall Street Journal (4-16-09) noted that for the first time since 1955 Consumer Prices on average are down. Even in past recessions this has never occurred. Or in other words, this statistic points to a rabidly consuming nation going on a crash spending diet that will last well beyond the duration of this deep recession. This recession will be a lasting memory point for our country.
We see the following trends emerging for the foreseeable future in all walks of housing:
1. More smaller model homes with great architecture.
2. More energy efficient homes with use of re-cycled products and new construction procedures.
3. Reasonable land opportunities that come from this cycle’s pricing pressures.
4. Look for more panelization to speed home production. Builders want it sold and closed faster to contain costs and improve productivity.
5. Smaller home sites in single family and more density in multifamily sites. Cities, now realize that increased density is more efficient for services charged by them and it incentivizes builders to re-think vacant sites not earning tax dollars.
6. Reduced expectations among the 75 million people in the USA that are currently over 50. In some of the expensive locales empty nesters and seniors will rent instead of owning. Home price appreciation is not worth the exposure to higher taxes, insurance and higher costing city services. This is especially true of coastal cities.
7. Better designed rentals and their amenities to capture the over 50/empty nester that is a discriminating buyer and renter.
8. Look for ownership of homes to still dominate the marketplace.
We see this as just a few of the trends in the coming months as a new cycle begins to emerge. It is imperative that any planning for the next cycle be exact and detailed. Longer planning time frames will occur. THIS IS WHEN YOUR REAL ESTATE PROFESSIONALS ARE MOST IMPORTANT TO BUILDERS, DEVELOPERS, BANKS, INVESTORS AND MUNICIPALITIES. Next month’s blog will address the Consultants role during the stable part of a cycle.
Call your Real Estate Consultant and give yourself the “EDGE.”
Beginning of a Cycle
Now (at the beginning of a Cycle) is the time when different ideas and new approaches are needed to set the stage for the successful long run ahead. Latest stories from around our industry are fairly predictable when it comes to builders and developer’s positioning themselves at the beginning of a new housing cycle. While many of the usual strategies are applied, there are a few twists emerging in this cycle that we are seeing nationally as builders/developers unveil the next generation of housing.
Many of the giant national builders and not so large building firms are introducing downsized new models while maintaining the same standard of interior luxuries as before. In addition, developers are minting smaller home sites. No surprises there. However different strategies are afoot to make homes “Green” and Energy efficient as never before. There is also the appearance that these new strategies as well as the tried and true strategies that worked in the past will last much further into the coming cycle. With more oversight ahead a noticeable change will be the consultant’s corporate role. They will provide better research, objective and creative marketing strategies, proforma realities and lender required oversight.
Because this has been such an evasive and deep recession touching so many sectors (financial, auto, housing, finance, travel, etc.) Americans are re-thinking their lives and their spending habits. Today’s Wall Street Journal (4-16-09) noted that for the first time since 1955 Consumer Prices on average are down. Even in past recessions this has never occurred. Or in other words, this statistic points to a rabidly consuming nation going on a crash spending diet that will last well beyond the duration of this deep recession. This recession will be a lasting memory point for our country.
We see the following trends emerging for the foreseeable future in all walks of housing:
1. More smaller model homes with great architecture.
2. More energy efficient homes with use of re-cycled products and new construction procedures.
3. Reasonable land opportunities that come from this cycle’s pricing pressures.
4. Look for more panelization to speed home production. Builders want it sold and closed faster to contain costs and improve productivity.
5. Smaller home sites in single family and more density in multifamily sites. Cities, now realize that increased density is more efficient for services charged by them and it incentivizes builders to re-think vacant sites not earning tax dollars.
6. Reduced expectations among the 75 million people in the USA that are currently over 50. In some of the expensive locales empty nesters and seniors will rent instead of owning. Home price appreciation is not worth the exposure to higher taxes, insurance and higher costing city services. This is especially true of coastal cities.
7. Better designed rentals and their amenities to capture the over 50/empty nester that is a discriminating buyer and renter.
8. Look for ownership of homes to still dominate the marketplace.
We see this as just a few of the trends in the coming months as a new cycle begins to emerge. It is imperative that any planning for the next cycle be exact and detailed. Longer planning time frames will occur. THIS IS WHEN YOUR REAL ESTATE PROFESSIONALS ARE MOST IMPORTANT TO BUILDERS, DEVELOPERS, BANKS, INVESTORS AND MUNICIPALITIES. Next month’s blog will address the Consultants role during the stable part of a cycle.
Call your Real Estate Consultant and give yourself the “EDGE.”
Friday, March 27, 2009
Positive Signs ahead or more economic Slight of Hand?
It certainly has been a rough recession (is there any other kind?). For us in the Carolina's, Georgia and Tennessee we felt the drop about a year after South Florida. South Florida officially started down in Real Estate in July of 2005; now going on 4 years. Now that the dates are known when will we book an official bottom and even more importantly, when will we see positive economic growth again in Real Estate and beyond?
This month (March 2009) many indices are pointing to better times ahead. First came the report of February existing home sales, multi-home sales nationwide and more recently new home sales and durable goods. Interestingly, these aforementioned items generally lead us into a recession, but do not necessarily lead us to a recovery. However, in this case, since our government has put such an emphasis on Real Estate it looks as though this will be the leader. Hard times are still ahead for automobiles as projections of new units are at a low 10 million cars a year in 2009, down from record highs around 16 million/year just 2 years ago.
As consultants it is our job to look where ever we can for reliable changes in the market. Reliable changes being the key phrase. While it appears good for February and March in the housing sector, what will April and May bring? Again, let's look at some trends in housing.
Mortgages are at their all time lows and mortgage brokers and banks are busy writing business again.
Nearly all of the original $700 billion stimulus has been spent, although we have no detailed reports as of yet where exactly the money went, it will soon show results.
Real Estate inventory around Florida is falling, so are prices but not as drastically. The minute foreclosures begin dropping as a large percentage of sales, prices will begin to rise...slowly. This is a buying opportunity.
In Atlanta last summer the MLS billboard along the interstate showed approximately 102,000 homes listed. Last week it was around 82,000.
AS WHEN ENTERING ANY RECESSION, IT IS NEVER JUST ONE ITEM THAT BRINGS DOWN THE ECONOMY TO NEGATIVE GROWTH LEVELS. IT IS A SERIES OF INTER-RELATED FACTORS THAT BEGIN THE ACTUAL AND PERCEIVED DOWNTURN AND THE ACCOMPANYING HUMAN PESSIMISM.
SO TO IS THE BEGINNING OF A RENEWED ECONOMIC TREND TO THE POSITIVE. TODAY'S WALL STREET JOURNAL IS REPORTING MUCH LESS PAIN AND AGONY AS THEY WERE FROM OCTOBER 2008 UNTIL MARCH 1ST 2009.
LOOK AROUND AND OBSERVE THE NEWS AND ITS TONE. FINALLY AMERICANS ARE STARTING TO GET TIRED OF SITTING AROUND COMPLAINING AND WE SEEM TO BE TOUCHING OUR TOE IN THE ECONOMIC WATERS THAT AWAIT.
AS CONSULTANTS, WE OBSERVE, WE ANALYSE, WE QUESTION AND WE ARRANGE FACTS IN A LOGICAL FASHION IN ORDER TO MAKE DECISIONS FAVORABLE TO OUR CLIENTS. SO WHAT ADVICE DO WE GIVE OUR CLIENTS TODAY....."IT IS TIME TO BE WATCHFUL AND PREPARED." REAL ESTATE GOES ON IN A SLOWER BUT CHANGING ENVIRONMENT. OUR CLIENTS ARE IN VARIOUS STAGES; SOME ARE MOVING INVENTORY, SOME ARE RETOOLING PRODUCT WITH NEW DESIGNS AND MARKETING CAMPAIGNS,SOME ARE BEGINNING TO LOOK AT ADDING LAND TO THEIR INVENTORIES FOR NEW COMMUNITIES AS OTHERS SELL OR JOINT VENTURE EXISTING LAND HOLDINGS. AS PART OF THESE OPERATIONS BUILDERS AND DEVELOPERS ARE REVISITING THEIR BANKS AND MODIFYING THEIR FINANCING TERMS OR PLACING NEW FINANCING. TIMING IN OUR BUSINESS IS EVERYTHING BECAUSE REAL ESTATE TAKES TIME TO SPOOL UP, AND TIME MEANS EXPOSURE TO MARKETS THAT CHANGE IN CYCLES. NO ONE SAID IT WAS EASY, BUT KEYS TO THE FUTURE ARE IN THE NEWS EVERY SINGLE DAY.......AND TO, THAT IS WHERE YOUR CONSULTANT SHOULD BE! GET THE EDGE.
SINCERELY,
THE EDGE TEAM
This month (March 2009) many indices are pointing to better times ahead. First came the report of February existing home sales, multi-home sales nationwide and more recently new home sales and durable goods. Interestingly, these aforementioned items generally lead us into a recession, but do not necessarily lead us to a recovery. However, in this case, since our government has put such an emphasis on Real Estate it looks as though this will be the leader. Hard times are still ahead for automobiles as projections of new units are at a low 10 million cars a year in 2009, down from record highs around 16 million/year just 2 years ago.
As consultants it is our job to look where ever we can for reliable changes in the market. Reliable changes being the key phrase. While it appears good for February and March in the housing sector, what will April and May bring? Again, let's look at some trends in housing.
Mortgages are at their all time lows and mortgage brokers and banks are busy writing business again.
Nearly all of the original $700 billion stimulus has been spent, although we have no detailed reports as of yet where exactly the money went, it will soon show results.
Real Estate inventory around Florida is falling, so are prices but not as drastically. The minute foreclosures begin dropping as a large percentage of sales, prices will begin to rise...slowly. This is a buying opportunity.
In Atlanta last summer the MLS billboard along the interstate showed approximately 102,000 homes listed. Last week it was around 82,000.
AS WHEN ENTERING ANY RECESSION, IT IS NEVER JUST ONE ITEM THAT BRINGS DOWN THE ECONOMY TO NEGATIVE GROWTH LEVELS. IT IS A SERIES OF INTER-RELATED FACTORS THAT BEGIN THE ACTUAL AND PERCEIVED DOWNTURN AND THE ACCOMPANYING HUMAN PESSIMISM.
SO TO IS THE BEGINNING OF A RENEWED ECONOMIC TREND TO THE POSITIVE. TODAY'S WALL STREET JOURNAL IS REPORTING MUCH LESS PAIN AND AGONY AS THEY WERE FROM OCTOBER 2008 UNTIL MARCH 1ST 2009.
LOOK AROUND AND OBSERVE THE NEWS AND ITS TONE. FINALLY AMERICANS ARE STARTING TO GET TIRED OF SITTING AROUND COMPLAINING AND WE SEEM TO BE TOUCHING OUR TOE IN THE ECONOMIC WATERS THAT AWAIT.
AS CONSULTANTS, WE OBSERVE, WE ANALYSE, WE QUESTION AND WE ARRANGE FACTS IN A LOGICAL FASHION IN ORDER TO MAKE DECISIONS FAVORABLE TO OUR CLIENTS. SO WHAT ADVICE DO WE GIVE OUR CLIENTS TODAY....."IT IS TIME TO BE WATCHFUL AND PREPARED." REAL ESTATE GOES ON IN A SLOWER BUT CHANGING ENVIRONMENT. OUR CLIENTS ARE IN VARIOUS STAGES; SOME ARE MOVING INVENTORY, SOME ARE RETOOLING PRODUCT WITH NEW DESIGNS AND MARKETING CAMPAIGNS,SOME ARE BEGINNING TO LOOK AT ADDING LAND TO THEIR INVENTORIES FOR NEW COMMUNITIES AS OTHERS SELL OR JOINT VENTURE EXISTING LAND HOLDINGS. AS PART OF THESE OPERATIONS BUILDERS AND DEVELOPERS ARE REVISITING THEIR BANKS AND MODIFYING THEIR FINANCING TERMS OR PLACING NEW FINANCING. TIMING IN OUR BUSINESS IS EVERYTHING BECAUSE REAL ESTATE TAKES TIME TO SPOOL UP, AND TIME MEANS EXPOSURE TO MARKETS THAT CHANGE IN CYCLES. NO ONE SAID IT WAS EASY, BUT KEYS TO THE FUTURE ARE IN THE NEWS EVERY SINGLE DAY.......AND TO, THAT IS WHERE YOUR CONSULTANT SHOULD BE! GET THE EDGE.
SINCERELY,
THE EDGE TEAM
Thursday, February 19, 2009
SUBJECT: How to determine the worth of your consulting team.
Choosing a consultant can be a daunting task. Many people claim to be an expert or a consultant, so how do you know?
KEYS TO A GOOD CONSULTANT:
1. The consultant must be relevant to the reason you are asking him to join your team. In other words, will he add value to your assignment? Value adding is important.
2. The person or team should be experienced with years of success in the field you are in.
3. The consulting team should have a diverse background amongst themselves. This is true for nearly every industry. With Edge the spectrum of services is very broad because the partners each enjoyed a long career in separate but similar disciplines- i.e., Sales, Marketing and Advertising plus Building, Development and Financial.
4. Chemistry within the group. A consultant will likely be around for some time interacting with your group. He must be compatible with the client’s team.
5. Commitment to excel. Generally a consultant is coming aboard to solve a problem or affect a solution or new direction. Smart people hire consultants, so the fix or that little bit of key advice that will make the difference is generally hard to find at first. A real commitment to the task is a must. This goes back to #1; is there value added to justify the fee. Committed consultants are worth their weight in gold because they become the least expensive cost to solving your problem.
6. The client must be open to “outside the box thinking.” This is easy to comprehend and is often the best reason to periodically hire consultants even when you may not need them. A business or corporate culture gets predictable and looses creativity over time simply because they are used to their way of operating. Consultants not only work for you, they may work for someone in your business or even in your area. Consultants see a broader base of successful tactics to common problems from their client base. The broad over view a consultant offers its clients gives you ideas beyond your own business culture……truly outside the box.
7. Having a consultant on fee for the time necessary to analyze the corrections and make mid-course corrections during the implementation phase. Consultants are human and they need to evaluate their own solutions as an ongoing process. They need time to watch their recommendations flower into a successful plan.
8. A consultant should always stay in touch, even after the completion of an assignment. Prudent clients realize that overhead is expensive but consulting is not. It saves money in the end and often replaces overhead.
9. Good in any region. Real Estate is Real Estate. There certainly are regional differences both geographically and otherwise. But nuances by Region are generally not difficult to quantify and overcome, and can in many cases offer fresh solutions to that region from outside. We have worked with California architects in Florida and North Carolina. The brainpower and creativity was worth the adaptations required. Building codes may vary, but sticks are sticks and bricks are bricks. Good floor plans and elevation designs cross regional boundaries easily and frequently.
The Keys to a good consultant are many, but the overall cost is a bargain if the consultant has done his job.
Choosing a consultant can be a daunting task. Many people claim to be an expert or a consultant, so how do you know?
KEYS TO A GOOD CONSULTANT:
1. The consultant must be relevant to the reason you are asking him to join your team. In other words, will he add value to your assignment? Value adding is important.
2. The person or team should be experienced with years of success in the field you are in.
3. The consulting team should have a diverse background amongst themselves. This is true for nearly every industry. With Edge the spectrum of services is very broad because the partners each enjoyed a long career in separate but similar disciplines- i.e., Sales, Marketing and Advertising plus Building, Development and Financial.
4. Chemistry within the group. A consultant will likely be around for some time interacting with your group. He must be compatible with the client’s team.
5. Commitment to excel. Generally a consultant is coming aboard to solve a problem or affect a solution or new direction. Smart people hire consultants, so the fix or that little bit of key advice that will make the difference is generally hard to find at first. A real commitment to the task is a must. This goes back to #1; is there value added to justify the fee. Committed consultants are worth their weight in gold because they become the least expensive cost to solving your problem.
6. The client must be open to “outside the box thinking.” This is easy to comprehend and is often the best reason to periodically hire consultants even when you may not need them. A business or corporate culture gets predictable and looses creativity over time simply because they are used to their way of operating. Consultants not only work for you, they may work for someone in your business or even in your area. Consultants see a broader base of successful tactics to common problems from their client base. The broad over view a consultant offers its clients gives you ideas beyond your own business culture……truly outside the box.
7. Having a consultant on fee for the time necessary to analyze the corrections and make mid-course corrections during the implementation phase. Consultants are human and they need to evaluate their own solutions as an ongoing process. They need time to watch their recommendations flower into a successful plan.
8. A consultant should always stay in touch, even after the completion of an assignment. Prudent clients realize that overhead is expensive but consulting is not. It saves money in the end and often replaces overhead.
9. Good in any region. Real Estate is Real Estate. There certainly are regional differences both geographically and otherwise. But nuances by Region are generally not difficult to quantify and overcome, and can in many cases offer fresh solutions to that region from outside. We have worked with California architects in Florida and North Carolina. The brainpower and creativity was worth the adaptations required. Building codes may vary, but sticks are sticks and bricks are bricks. Good floor plans and elevation designs cross regional boundaries easily and frequently.
The Keys to a good consultant are many, but the overall cost is a bargain if the consultant has done his job.
Thursday, January 22, 2009
Why do people seek the services of consultants. For any number of reasons.
A. Many believe an outside opinion brings clarity beyond the day to day organization
B. Banks and lenders often require third party expertise
C. Others believe Overhead is Out and Consulting is in, seeking to contain their costs
D. Still others augment their company employees brain power by bringing the fresh ideas consultants offer
The definition of “consulting” is – to ask or give advice, to seek an opinion, to seek or give information. Bringing together a collaborative and cohesive team to solve a problem.
People seek consultants because their shared experiences in their profession over time creates a reservoir of information so valuable that it should be shared amongst people in like industries or fields. Our job as consultants is to broaden experience and expertise by disseminating the information we have. Sage advice is hard earned capital valuable to others seeking solutions and answers. The Edge Consultants offer this hard earned capital in many forms of data and actions. The combined resumes of Gene Berns and Steve Gravett are valuable tools for those seeking “The Sage Advice.”
A. Many believe an outside opinion brings clarity beyond the day to day organization
B. Banks and lenders often require third party expertise
C. Others believe Overhead is Out and Consulting is in, seeking to contain their costs
D. Still others augment their company employees brain power by bringing the fresh ideas consultants offer
The definition of “consulting” is – to ask or give advice, to seek an opinion, to seek or give information. Bringing together a collaborative and cohesive team to solve a problem.
People seek consultants because their shared experiences in their profession over time creates a reservoir of information so valuable that it should be shared amongst people in like industries or fields. Our job as consultants is to broaden experience and expertise by disseminating the information we have. Sage advice is hard earned capital valuable to others seeking solutions and answers. The Edge Consultants offer this hard earned capital in many forms of data and actions. The combined resumes of Gene Berns and Steve Gravett are valuable tools for those seeking “The Sage Advice.”
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