Part of what I do is look closely at sales in a given area to better understand value and what is really selling, and at what price.  The other day I did just that for Beach Haven, NJ, and thought I would share the findings.  Here are the sales of single family homes in Beach Haven over the past 6 months. 

One of the things that stands out to me is the same thing that jumped out last time I did this, back in March.  While it seems that everything on the Island is big or bigger, a high percentage of homes sold are smaller - 1,500 ft or less.  For sure this is at least partially due to lower price points, but I think it also suggests that a good number of buyers want smaller homes.

It isn’t a coincidence that our smallest home is 1,250 sq. ft., nor is it shocking that more people call on it than our larger home.  There is a market for smaller homes.  The tricky part for us right now is that existing smaller homes have come way down in cost as compared to a few years ago.

This is a difficult truth to consider as a developer.  Given the cost of land (at least $450,000) you are lucky - very lucky - to be able to sell the smaller home (including land) in Beach Haven for less than $750,000 and make money.  People can purchase similarly sized homes for less, as you can see.  Does this mean we can’t develop the smaller home?  I don’t think it does, but it does give pause.  What do you think?  People complain all the time about how every home is too big.  Yet when you look at it closely the reasons become obvious why builders and developers build larger homes. 

Would you buy our home for $750,000 if you could buy an older one, in need of significant work, for, say $550,000 - $600,000?  Would you rather pay $900,000 for a larger home?