More Realistic NumbersAll ...
A lot has happened to housing prices since 2020. In fact it surprised us all, especially the trend to get out of densely urban areas to more country home locations due to the need for fresh air and living outside of an onerous mask regime that occurs from place to place.
The numbers and metrics have changed substantially. I will list the changes and what issues have remained the same, what has changed and summarize with real estate 101.
What has remained the same 1. To the East of Sage Ranch, the chronic shortage of safe and new housing in the Antelope Valley (Palmdale, Lancaster, Mojave, Edwards Airforce Base, USAF Plant 42 and surrounding areas 500,000+ people) where for the recent decade(s), the Aviation and Military community cannot fulfill the job openings because of the heavy gang infestation problem in Lancaster and Palmdale. Driving 50 miles south to LA takes 2.5 hours each way in rush hour and the preference was always to drive 40 minutes NW to the Tehachapi Valley but the City and Valley never allowed new housing stock for various reasons
2. To the West of Sage Ranch, the acute smog and health issues of living in Greater Bakersfield.
A region of well over 500,000+ people in Greater Bakersfield, it has one of the highest Asthma rates in the USA and many other deadly diseases of being in a heat trap within the heaviest agriculture and pesticide areas plus the heart of one of the main oil producing regions in the USA. (Heavy oil with Steam injection) and abondoned oil wells from over 100 years ago. (10,000+) Sage Ranch is only a 35 minute drive East.
3. A general trend to an areas that are healthy and Tehachapi Valley being 95 miles from LA has 4 seasons, snow and colder winters than Vancouver but moderate summers.
4. The Tehachapi Valley is a historical tourist area. Trains, Major Biking events, World famous Glider Port, AVA was just granted last year (American Viticultural Area) designation allows local vinters to use the "Tehachapi Mountains" as an appellation of origin.
5. Tight ownership of water. If you do not own water rights (I bought 304 Acre feet) you cannot build. There is enough water for Sage Ranch and another new 300 unit apartment complex accros the street (GRB will buy) and a luxury RV resort I am building and maybe another small development and the area is
completely done for good. This drives up real estate prices as building anything new will be over once we are done.
What has changed Real Estate prices have escalated well beyond new construction cost. Lumber and materials may now drive up construction by $25 per sq foot, but our sales price will be up over $130 per square foot. Last year average was $350,000 and today going forward is $480,000 USD which includes all product types.
Real Estate 101 While construction profits historically around the USA are around 15% to 25% for a new home price, the key aspect is the land value and the value to the word "Entitlement". The meeting on Monday is all about entitlement. Entitlement historically has value increases well over 1000+% profit and is the largest single wealth creator in any real estate proposition. If our "all in" cost to build is 130 per square foot, GRB gets to allocate our sales price of the land (individual lot) to the equation. We will add at least $100 per square foot as our land contribution making the total costs plus the 25% margin to equal $280 per square foot. There is no dispute anywhere in the world that "entitlement" is the key economic driver in real estate development. This is no different than my Canadian home, a 7,500 sq foot new home I bought in Coquitlam in May 2000 for $699,000. I had no idea in 2018 Coquitlam would rezone my home and the homes around me into apartment zoning. What was a $699,000 purchase, now has $8 Million of raw land value if I build the 12 units and sell them for the market rate of $14 Million. The difference is that with my home, I did not ask for the entitlement as that was a large zone change driven by the City. With Sage Ranch, the older zoning was 688 homes and now its 995, but regardless you still need entitement to build. That is the game changer. Keep in mind Sage Ranch is an infill project and the last remaining empty space in the middle of the City. Their own policy requires this to get built out.
This project is double the net value if not a lot more to Greenbriar going forward.
I hope this helps!
JEFF CIACHURSKI
Chief Executive Officer
Greenbriar Capital Corp
Greenbriar Capital Holdco Inc
Greenbriar Capital (U.S.) LLC
Captiva Verde Wellness Corp
9 Landport
Newport Beach
California USA
92660
Direct: 949-903-5906
email: westernwind@shaw.ca
www.greenbriarcapitalcorp.ca
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