Commercial follows residential....or the other way around?

Posted by on Sunday, July 18th, 2010 at 8:55am.

This fine Sunday morning as I was sipping on my locally roasted Sweetwater Coffee and reading the latest installment from the Jacksonville Business Journal i stumbled across an article with this headline: Forgotten subdivisions starting to sell. My background is in commercial real estate and I was always taught that Commercial follows residential by 6-9 months, or more. So if the residential housing market declines, well, commercial will follow.

I think in most cases this is true. It follows a supply/demand theory that can be justified and explained. However, in reading the above article this morning, I think we are in an 'exception to the rule' situation here. What does this mean for you, the buyer/seller????

Fact is: national home builders like KB, Ryland, Richmond American, Mattamy etc are scooping up land in all of these stalled developments. I could go into details about the reasons: the cost of civil, the time it takes to permit new developments, but the bottom line is, based on their actions/predictions, the market isn't going much lower. This tells us that NOW is the time to buy or sell. They want to be positioned for the recovery, as slow as it may be. So they buy these lots, in bulk, for >.50 on the dollar.

So as a consumer, let's start thinking like a business. You can never time the bottom of any market, but what you can do is look at indicators around you. Every State, City, Neighborhood is different. Looking locally, here in jax, there are a good contingent of our area home builders that are following suit. So if you were thinking....now is a good time, you were right. And if you weren't...well shoot us a message and we'll talk. Maybe over a cup of Sweetwater coffee.

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