Downsizing Developers: 'Stayin' Alive'

Dave Alan Homes in Minneapolis'

Bryn Mawr Neighborhood

Feel the city breakin'
And ev'rybody shakin'
And we're stayin' alive, stayin' alive.
Ah, ha, ha, ha,
Stayin' alive.
Stayin' alive.
Ah, ha, ha, ha,
Stayin' alive.

--lyrics, "Staying Alive" (The Bee Gees)

How does a local home builder weather an epic downturn in new construction amid a glut of upper bracket homes?

By going down-market (relatively speaking, at least).

New Math

In this case, Dave Alan Homes appears to focusing more on mid-tier neighborhoods like Byrn Mawr in Minneapolis, rather than upper bracket spots closer to the lakes or in Edina.

So, instead of buying tear-down homes for $300k-$350k and putting up $1.2M new construction in their place, builders are plunking down $150k or so and building $500k-$600k homes.

In fact, $150k is exactly what the buyer paid for 4xx Thomas Ave. South in February (market time: 1 day).

Judging by the state of construction I saw when I drove by this morning, the home is still about 3 months away from completion (note: the home pictured above is another, similar-looking Dave Alan home, not the one on Thomas).

P.S.: Since it's not on MLS, it's possible that this home is being built for a client (rather than as a "spec home").

Stock Analysts on BP

Is BP Stock a Buy?

No, I'm not going to add my outrage to the flood of commentary already about the BP oil spill in the Gulf of Mexico (a sickening human, environmental, and economic tragedy, on multiple levels).

Instead, given my interest in the stock market (after real estate, of course!), I thought I'd summarize what various stock commentators and analysts covering BP have had to say (I'm paraphrasing, but the gist is accurate):

April 20 -- Date of spill (BP stock price = $60): "Buy! The damage from the spill is likely to be contained, and it's far from clear that BP -- rather than Halliburton or TransOcean -- is liable."

April 30 -- Estimate of spilled oil quadrupled (BP stock price = $50): "Buy! The damage and legal liability are likely to be far greater than originally estimated -- but that's more than reflected in the now-lower stock price."

May 15 -- Various efforts to cap the spill have all failed; oil continues to spew into the Gulf (BP stock price = $42): "Buy! The market has already priced in billions of legal liability -- liability that's likely to be far in the future."

June 1 -- U.S. Justice Department announces criminal probe into BP (BP stock price drops to $36). "Sell! The oil spill and its after-effects threaten to bring down the company."

Hmm, I wonder who's been doing all the selling between April 20 and June 1???

Post-Memorial Day (Consumer) Tides

"It Was the Best of Times,
It Was the Worst of Times"

Best time to buy airplane tix online?

Tuesday a.m. after Memorial Day weekend, when everyone just finished traveling (and isn't thinking about booking future trips).

Worst time to get a car wash?

Tuesday a.m. after Memorial Day weekend, when everyone who went up to their cabin goes to get their car washed (and the sand vacuumed out of their cars -- a process that I now know from experience takes about 10 minutes per car).

"Ummm . . . Nice Tree for Sale??"

I just came across this photo -- the lead photo -- on a current MLS listing (there are a maximum of 10 photos, but only one appears on the first page of the MLS listing).

And no, the home's not listed for less than $100k somewhere in the 'sticks; it's a Golden Valley home on the market for $450,000.

It turns out that what's for sale is actually a to-be-built "spec" home.

The usual convention in such cases is to show some sort of architectural rendering of the planned home, even if it's subject to change.