What will successfull builders and developers have to do differently in the coming years?

I recently read an article about what makes a successful builder and developer. The article stated that builders and developers will have to get better at what they do in the coming years. Only about one out of ten builders/developers I have spoken with actually made money building houses between 2002 and 2006. The other 90 percent only made money because their lots appreciated while they were preparing to build on them. Since all appreciation accrues to the land, this factor masked the losses that the builders were experiencing when constructing the improvements. House prices will be constrained by more conservative underwriting by lenders. This means that builders and developers will have to look to productivity increases for their profits, not increasing prices. I don't mean squeezing trade contractors and suppliers - I mean smarter products, more efficiently designed, ­ delivered quickly and competently. The good news is that there is tremendous waste in both the land-development and homebuilding processes. I know this is true because some builders consistently make net margins of 15 percent and above on their homebuilding operations (excluding their profits on land), while the majority think it's normal to make two percent to five percent net margins. Successful operators in this industry will start every project with a reasonable projected market value, subtract their profit, and then build the project out of what's left. This process will be repeated and refined over time, resulting in increasing efficiencies in both direct cost and cycle times, with the end result of increased profits and increased customer satisfaction.

The other major change: ALL forms of capital are going to be more expensive. Bank lending will eventually come back, but it will be much more conservative and require a great deal more collateral than before. I'm already seeing investor equity coming back into the market, but investors will want to see more equity provided by the builders and developers they invest with. This means that company growth will be limited by company equity.

It also means that the successful operators of the future will pay close attention to their operations, since their ability to grow will be enhanced by increases in both their profitability and their ability to turn their inventory more rapidly. So, the choice to be a successful operator in the industry is up to you. You have gone through the exercise of downsizing your operations, so how do you increase efficiencies in both direct-cost and cycle times to bring increased profits and increased customer satisfaction? One company that has been successful in assisting with such increases in profitability and increased cycle times is CB Quantifications (www.charlesanbetty.com). After viewing their website you may want to schedule a phone conference or face-to-face appointment to see just how you can increase profitability and cycle time without the cost of overhead. Are you ready to make some changes to make yourself and your business more successful?

The Time to take Action is NOW!!!

Austin American Statesman - Austin Home Sales: Area home sales jump, fueled by tax credit

Existing home sales in Central Texas rose 6.4 percent in September, the first year-over-year increase in more than two years, and the median sales price also was up, rising 2 percent to $185,250, the Austin Board of Realtors reported Tuesday.

Sales were buoyed by factors including a federal tax credit of up to $8,000 for eligible first-time homebuyers and mortgage interest rates that are hovering around 5 percent.

The 1,780 sales last month were up from 1,748 in August and up from 1,673 in September 2008. The number of sales due to close in October was up 24 percent from a year ago, an indication that the tax credit is continuing to spur sales, real estate agents and experts say.

With pending sales up and prices stabilizing, it seems "to indicate a market that is beginning to recover," said Charles Heimsath, an Austin real estate consultant, although he predicts "a slow ascent into recovery over the next 12 to 18 months."

Heimsath and other experts have cautioned that the housing market, locally and nationally, could lose steam if the tax credit is not renewed, although there are proposals in Congress to extend or broaden it.

"Still, it does appear the worst of the housing downturn is behind us, although it may be some time before we see a marked turn upward," said D'Ann Petersen, an economist with the Federal Reserve Bank of Dallas, adding that she expects "a slow, prolonged recovery."

Nearly half the sales in September were for homes costing between $100,000 and $199,999 — a typical price range for a first-time home.

Nick Teplitz moved to Austin from Los Angeles in late May, drawn by the city's reputation as a "hip, fun city" and lower housing costs than in California.

He said the tax credit was a factor in his purchase of a unit at 2020 Congress, an apartment building that was converted to condominiums on South Congress Avenue.

Teplitz, a writer, closed on his condo June 30, paying under $100,000 for a one-bedroom unit.

Instead of "flushing $2,000 a month down the toilet" on rent in Los Angeles, Teplitz, 32, found he could own his home in Austin for one-third that much.

He said he thinks the tax credit should be extended, because it's "definitely going to keep the market afloat right now ... and keep people buying."

Jay Gohil, chairman of the real estate board, said the tax credit is likely to feed sales into November as buyers scramble to make the deadline.

The credit was passed earlier this year as part of the federal stimulus package. It provides a 10 percent credit, up to $8,000, for first-time buyers and those who have not owned a home in the previous three years. It is available to single buyers who make less than $75,000 a year and couples who make $150,000 or less.

Through September, the 14,286 home sales were down 14 percent from the same nine months of 2008, and the median price was unchanged, at $190,000.

But home sales have been slowly improving this year along with the economy, spurred by the tax credit and low mortgage rates.

Nell Hanson, a real estate agent with JB Goodwin Co., said the company "has had a huge influx of buyers who want to use the tax credit." Although an extension of the credit would be beneficial, "the low interest rates and the potential rise in the median price in Austin for 2010 will keep sales going up," Hanson said.

Greg Cooper, CEO of Goldwasser Real Estate in Austin, said "it would be suicide for the (housing) market" if the tax credit isn't renewed.

"I can't see them (Congress) taking it away right now," Cooper said, at least not until job growth comes back and unemployment eases.

Cooper said sales at his firm were up 51 percent in September over a year earlier, and "if we close what we have pending," October's sales will be triple that of last October's.

"Obviously, the stimulus is clearly helping," Cooper said.

Steve Cochrane, managing director at Moody's Economy.com, an economic forecasting and consulting firm, said he thinks that there is "a better than even chance" the credit will be renewed. He noted that there are positive ripple effects, as owners sell their entry-level homes to first-time buyers and are able to move to another home.

Asked whether the credit is artificially propping up the market, Cochrane said: "One can argue that any kind of government stimulus is artificial. But if it acts as the spark to get the market going, that can be fine. The government doesn't have to stay in the business of providing the spark forever."

View article in Austin American Stateman

Forth of July Recipes!

Fire it up and then cool it off this Forth of July with my favorite recipes!

4th of July Cherry Bombs Recipe

Ingredients:

• 12 fresh habenero peppers
• 4 ounces softened cream cheese
• 2 tablespoons sour cream
• 1/2 package dry onion soup mix
• 1 teaspoon Worcestershire sauce
• 1 teaspoon dried red bell pepper flakes
• 1 large egg, beaten
• 10 Ritz crackers, pulverized to very fine consistency

Directions:

• Combine the cream cheese, sour cream, soup mix, Worcestershire sauce, and pepper flakes thoroughly. Allow to sit at room temp until you are ready to use.
• Wearing rubber gloves, slice almost through the top of each pepper, leaving the top as a flap. With a small melon scoop, remove the seeds and white pulp from each pepper. Place cream cheese mixture in a small decorating bag and with a medium 'o' tip pipe mixture into each pepper, mounding slightly at the top. Brush pepper flap with some of the egg and close flap to seal.
• Refrigerate peppers for 30 minutes. Dip chilled peppers in egg wash and roll in cracker crumbs. Next step is to place peppers in the freezer until hard frozen, about 3 hours.
• Just before serving, remove peppers from freezer and drop into hot 375 degree oil and fry until golden. Pipe three dollops of cream cheese mixture decoratively on each plate and place one fried pepper in the center of each dollop. Decorate with sliced pickled cherry peppers, and leaf lettuce. Serve hot with a warning and fire extinguisher handy. Top of Form

Cantaloupe Fruit Salad

Ingredients:

• 2 ea Med. Cantaloupes *
• 1 ea Large Pineapple **
• 1 c Raisins
• 1 c Fresh Shredded Coconut
• 1 c Finely Chopped Walnuts
• 1 ea Large Apple ***
• 1 x Low-fat Yogurt

Directions:

• *Remove rind and seeds from cantaloupe.
• **Cored, Peeled, and cut into small chunks.
• ***Cored and cut into small chunks.
• Cut the cantaloupes into small chunks and mix with the pineapple, raisins, conconut, and walnuts in a large salad bowl.
• Scoop yogurt into individual serving bowls and pass the fruit salad. Stir to coat and enjoy. This dessert is wonderful on a hot day.
  

4th of July Red, White, and Blue Pizza

• 1 pt Strawberries, hulled and halved
• 1 pt Blueberries
• 1T plus 1 t Sugar, divided
• 1 T Brandy
• 4 6" Pizza Crusts, homemade or store bought
• 1 1/2 c Whipped topping, thawed

Directions:

• Preheat oven to 450 degrees F.
• Combine strawberries, blueberries, 1 teaspoon. of the sugar and the brandy.
• Sprinkle pizza crust with the remaining sugar.
• Bake 6-8 minutes on baking sheet; cool slightly.
• Fill with crust with strawberries and raspberries.
• Serve with a big dollop of whipped topping.

Alcoholic Beverages

4th of July Lemonade

Ingredients:

• 1 part Jack Daniel's bourbon
• 1 part triple sec
• 1 part sweet-and-sour mix
• 4 parts lemon-lime soda

Directions:

Combine all ingredients and serve this refreshing drink over ice.

Non-Alcoholic Beverage

Summer Delight Punch

Ingredients:

• 6 oz Can frozen orange juice
• 2 1/2 c Pineapple juice
• 12 oz Can apricot or peach nectar
• 1 ea Bottle ginger ale, (2 litre)
• 1 ea Lemon, sliced

Directions:

• Mix together the lemonade, orange juice, pineapple juice, and nectar and chill.
• When ready to serve drinks, add the ginger ale. Garnish with lemon slices.

Red, White, and Blueberry Freezee

Ingredients:

• 1 c Whipping cream
• 1/2 c Frozen blueberries
• 1 ds Lemon juice
• 1 x Sugar to taste
• Small Strawberries for garnish

Directions:

• Mix together the whipping cream, blueberries, lemon juice, and sugar in a blender.
• Top with a few strawberries. This refreshing drink is great on a hot day.

Lake of the Hills Regional Medical Center Another Step Closer

After nearly a year of negotiations Scott & White will soon add 22 acres of land to the 19 acres already donated by developers for construction of the future 40-acre Lake of the Hills Regional Medical Center in Marble Falls. “We’re another step forward,” says Scott & White President and CEO Alfred Knight, M.D. This latest development opens the way for the City of Marble Falls to begin connecting utilities to the site. Here’s what you can expect in the months to come:

• In 6 to 12 months. Utility lines to be completed, ground breaking for a medical office complex offering OB/GYN, orthopedics, pediatrics, geriatrics, neurology, and urology services.

• Nine months later: Construction of the medical office complex complete construction of the 80-120 bed level – two trauma center to begin.

• 18 to 24 months later: Construction complete on comprehensive care center and cardiac care facilities and advanced surgical laboratory, and imaging centers.

• The new medical campus will sit on 75 acres which developers will open for assisted car facilities, private medical practices, and other commercial enterprises.

Cimarron Hills Newsletter

Our New Colt: Bailey's Poco Buz

My Garden: Photos