August column for Builder & Developer magazine now online

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 column, click here.

To read the entire August 2013 issue in digital format, click here.

Did public builders destroy the market for private ones?

Boyce Thompson, Editorial Director for magazines such as Builder, Big Builder and Multi-Family Developer, has an interesting blog post online asking if the obsession by public builders to chase market share and improve their balance sheets ended up destroying the supply-demand balance of local markets. From his post:

There are many private builders out there who lay the blame for the housing boom, and subsequent bust, at the feet of public builders whom they say built homes and market share at any cost. These same builders, they argue, continued to pump out specs after the end came in an attempt to work off land inventory, at the expense of every other builder in the marketplace.

This argument holds some water. The publics did build up massive land inventory. They wanted to show The Street that they could feed a well-oiled home building machine that was cranking out 20 percent revenue growth, even in the face of mounting public resistance to development. Then, when the end came, they were forced to sell off land to generate cash. And they took impairments on what land they couldn't sell...

Click here for full blog post.