My column for the August issue of Builder & Developer magazine is now posted online.
For this issue, entitled "Land: The New Building Currency," I covered how the ability to buy and hold onto developable land has returned as a crucial form of currency in homebuilding. An excerpt:
A funny thing happened on the way to the housing rebound: land — and the ability to buy and hold onto it — has returned as the primary currency in the home building industry. At least for now, this access to capital will likely have a profound impact as stronger, public builders snap up private builders starved for cash and shut out of the public markets. As a result, look for even more consolidation as this stage of the revival plays out.
Whereas in 2007, the top 10 public builders sold 24 percent of new homes built and sold, during the first quarter of 2013 that capture rate had risen by six percentage points to 30 percent, at least according to an analysis by Deutsche Bank. That’s in large part due to the $1.5 billion some of these builders spent on eight large acquisitions over the last 18 months. Argues Lennar’s CEO Stuart Miller in a recent article in the Wall Street Journal, “We have the ways to win now: We participate in the natural recovery, but additionally, we’re picking up market share form a group of builders that isn’t able to get financing.”
To read the entire August 2013 issue in digital format, click here.