Business 101

Lets just take where the the market value of an owner occupied new construction duplex/townhouse is $140,000.  If you are a private developer you need to:

• find a cheap parcel of buildable land that you hopefully do not need any variances
• build it
• pay all the permitting and water/sewerage fees

Lets assume the expenses come in at $125,000 or less.  If you were to sell the property for $140,000 less broker fees, you may $10,000 to $20,000.   Bottom line alot of risk for not a hell of alot return.

Now add in the fact that you need to compete against a CDC, who spends $270,000 on their units, for the same buyer.  Here is the kicker, when they sell their $270,000 unit for $140,000, not only do they not lose 130,000---they make $37,000 ($370,000 development fee in the Sunday Telegram divided by 10).   

How does a private developer compete against a developer who should be losing $130,000 but makes almost $40,000?  Answer --they don't!!   They take their monies and invest in other areas.   Next time you see a private developer building anywhere else, but where the CDC's have control, you  now know why.