Guest blog entry from BETTY’S BLOG, A NEWSLETTER FROM BETTY HARDLE, RESIDENTIAL RESEARCH SERVICES & MARKETGRAPHICS RESEARCH GROUP
Permits are up over 37% in the last four years. Available developed vacant lots are down almost 40%. My take on these numbers is that the Twin Cities are building and selling more and more homes. Probably until the next recession.
Our major problem is the availability of lots. The national builders have the funds to buy land and develop lots. Local developers, of which there are only a few, may or may not have funds to keep on developing lots. And that will happen so long as the local builders can keep selling (and buying lots). Probably until the next recession.
In my opinion, the builders, as a group, need to support the development of lots, especially for single family homes. Probably need to discern the difficult or weak spots in the development & financing process, then analyze them, and then do what needs to be done so that there is not a lot & price crisis by 2016 or 2017.
Edsel Charles, the President of MarketGraphics, is one of the very few homebuilder industry researchers who actually makes predictions. The most amazing thing is that he has been proved correct. He predicted the timing of the Great Recession and several other earlier recessions correctly.
These are some of his current projections:
- Starts for 2019 of 14,580
- Another recession around 2020-2021
“We anticipate another recession around 2020-2021. It is recommended that in early 2019 an evaluation of all subdivisions take place. It is forecasted that by spring of 2020 a projected recession transition is underway. It would be important that by spring of 2021 that a developer has manageable cash flow developments.” -Edsel Charles
If what Edsel projects comes true, it means you have about six years to make money for your retirement. Take it from one who knows.
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