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we were to drop an alien into any major US city
and you said Believe it or not, one of our scarcest
assets as a city is our land. They would beam
you up and shoot you into a comet. Especially
in a state like Nevada, where you can get in
the car and drive from here to Reno, northern
Nevada, southern Nevada, and it's nothing but
land. It's all land. Yeah, you can. Right. So
it's something that I get asked a lot just in
passing among friends and colleagues and people
in the industry and people that I interact with.
It's why, why is it said that there's a land
shortage? So there's a lot of factors at play
here. No one wants to live in a house with no
running water. No one wants to live in a house
with no electricity. So if you look at what limits
a lot of development on the East Coast, it's
a fragmented land ownership, right? Because all
of that land is spoken for. Someone owns it.
Most land east of the Mississippi is owned by
private parties. Unless it's some sort of wildlife
preserve or something that was maybe donated
or something that was part of uh teddy roosevelt's
push for national parks and there's definitely
federal land east of the mississippi but for
the most part land that is being developed east
of the mississippi was bought by a private citizen
and developed but why does all the raw land not
just get developed then why what props up New
York housing prices when there's so much raw
land on Long Island when there's so much in Eastern
Pennsylvania that could be a wonderful master
plan suburb for New York City. Well a lot of
it is infrastructure and the grid and the water
grid I mean I'm not just the power grid but what
what is the water supply look like what do we
do with waste what do we do with streets where's
the political will to spend money on improving.
the roads and then making another exit ramp for
a thousand rooftop master plan community outside
of Philadelphia. Well, there's not much political
will, right? Because people will say, why can't
you improve my street corner? Why can't you improve
my schools? Why are we building a new school
for this community? So it is the land, but it
is that land viable. Does that pencil out if
you're building? That subdivision, let's say
you're a master plan developer and you're putting
a thousand or two thousand rooftops in What school
district are they gonna go to? Are you going
to fund those schools? Does the project still
pencil if you do all that? Can you assemble enough
land to make all that work? Can you assemble
the capital? Can you deploy the capital? Can
you get those things approved? Can you get the
infrastructure in place? Do you have those headwinds?
Are they insurmountable does the market? warrant
the end -of -day sales price that it would take
to get it to that. So that's why a lot of times
on the East Coast you'll see much more spot building
because it just doesn't make sense. It's too
much to ask of a local jurisdiction. It's also
much more fragmented back there. The landowners
don't want to part with their land if the value
of it is a tenth of what they thought because
it's just not a commercially viable venture to
develop it into whatever it is. You think about
how few players there are in any industry and
in our other episode where we talked about how
many publicly traded home builders there are
just nationwide and how many homes they put out
and how much they can corner the market. One
large publicly traded company in our market controls
about 20 % of new rooftops and I won't name them,
but it starts with a D and ends with an R. And
they control about 20 % of our market. So yes,
the free market should regulate everything, but
that's with the assumption that there's enough
choice in the market to allow customers to vote
with their feet and to say, well, you don't build
a sound home, so I'm going to choose this other
home. So I understand the need for regulation.
And I do love the idea that homes are better
today than they were 30 or 40 years ago. And
I appreciate the energy, the leaps and bounds
we've made with energy efficiency and how much
more earthquake resistant, fire resistant, weather
resistant, age resistant our structures are today
versus even 40 years, 30 years in the past, let
alone 100 years in the past, where the adage
of they don't build them like they used to, which
makes my Hit the hair on the back of my neck
stand up because tear apart at home built from
1955 that thing is built out of cardboard and
Paper that is not I'm grateful. They're not built
like that You could punch a hole in the siding
and your fist would go through into the bedroom.
Sometimes they didn't even have insulation. So
We're looking at the other extreme of it. I understand
and I have to take a step back and breathe as
to Give us to give myself Context in terms of
why we have these regulations and you can't you
can't count on the free market to iron all those
hiccups out take a trip to a third world country
and get in a 1984 Sentra that is your uber driver
and drive through those streets and alleyways
that are not regulated some are seven feet wide
and some are 70 feet wide and The structures
that are built over top of each other with the
laundry hanging out and you think well I don't
want zero regulation because this is what it
looks like And just the standardized right there's
a just just to know that that there is a general
safety component That's been considered before
that's right. That's right. It does give you
a great sense of comfort to know that so Well,
we're doing it temporary while we're dealing
with the temporary pain of building the structure,
which is a nine to 18 month process. We have
to think that structure is going to be there
for 100 to 200 to 300 years. We don't know. And
there's homes in England that are 500, 600 years
old. So I understand why. And I, and I, I want
to, I wanted to give our viewers that context
that I, I'm not anti -regulation. I love. the
idea that we have better building standards today
than we did even 20, 25 years ago. So that being
said, I want to trash the coats for once. No,
I think that's a good point to make though. I
mean, it isn't an anti -regulation. It's a brutal
crossing. It is. And I think what does get a
little frustrating is that there's never a push
to cut any regulations at all. That is so unpopular.
And there's really no will In the regulatory
agencies, because by doing that, they're shrinking
their footprint. So the Department of Building
and Safety wants robust codes. It's job security.
And most home building permits are minimum of
$5 ,000. You really could go up to 12, 15, 18,
$20 ,000. And you look at a municipality like
Clark County, now it's broken up. Sometimes the
City of Henderson gets that permit fee or, you
know, there's always County always collects a
certain impact fee, but there's always something
collected on every rooftop. And we know that
last year we built around 12 ,500 rooftops by
10 ,000 and my math doesn't even go. My mind
doesn't work in numbers that commas that long.
So I think that we have to remember that there
are some perverse motives that people don't want
to see regulations, any regulations roll back.
In fact, They have a vested interest in increasing
regulations, and I feel that certain agencies
locally might exist for that purpose, and you
might see them growing for the sake of growth.
So I thought of something last week that I found
exceptionally clever, but you might not. Regulations,
i .e. building codes in our industry, is kind
of like a garden, and once you plant it, the
garden just keeps growing and germinating a bigger
garden right and of course it wants to grow bigger
it's just naturally plants and weeds want to
grow it's not all crop it's just growth so if
you have a garden and you're watering it it'll
grow it might not be the stuff you want so you
could make a case for that garden and say it's
choked out by the weeds and that's kind of how
i feel that many times when i'm scratching my
head or Beating my head against the wall quite
frankly. I wish I was only scratching it. It's
not It's a lot of that. It's feels like regulation
and regulation for regulations sake and I think
that that's where my biggest frustrations come
from because I believe in the spirit of regulations
and I believe in the spirit of building codes
But I did a little exercise on our local Clark
County building codes and what is referenced
on a general set of stamped blueprints that I
submit to the city. And without boring our readers,
I'm going to bore them. 2021 International Building
Code, 2018 Universal Mechanical Code, 2018 International
Energy Efficiency Code, 2018 International Residential
Code, 2018 Uniform Plumbing Code. 2021 International
Wildland Urban Interface Code, 2021 International
Fire Code, 2017 National Electric Code, and the
2009 ICC, which is kind of an accessibility,
how structures are accessible to the population.
These all have to be referenced on a set of plans
that we've reviewed these plans to these codes.
Then I did a little exercise, if our audience
is still awake. How many pages those codes encompass?
Total. Okay. If you had to just guess all those
codes, how many pages, if we printed them out,
how many pages would all those codes take up?
How many reams of paper? Yeah. I'd say probably
500 pages. I mean, if you're looking, it would
sum up to... You libertarian. There is no way
in hell it's only 500 pages. There is no way.
It is 4912 pages of code. 4912 pages of code.
That's pages of code. If you printed out all
the codes that I just mentioned, mind you, those
are the codes in their entirety. All of our codes
have a parentheses that says with local amendments.
So 2021 international building code with local
amendments. So that's saying, yes, all of these
codes, we're also going to amend it to our codes
that pertain to this. So the uniform plumbing
code is something that is observed nationwide.
But then Clark County, our local jurisdictions,
your local jurisdictions are going to have additional
overlays and amendments. On top of that, I would
imagine that's another three, 400 pages. We're
over 5 ,000 pages of code. The design process
is when you have an architect revisions back
and forth and back and forth, sign off on that
set of architectures, and then it goes through
all the engineering. Approximately five engineers
that touched the home during the design process
and the pre -permitting process. Concurrently,
if you're in an HOA, while you're doing that,
you're generally getting your HOA design review
board to sign off on your design. So they take
a long time. So you want to start that early?
Usually, yeah. Once you have a set of plans,
you're going to meet with your design review
board and your HOA if you have one, and they're
going to see if your plan's... kind of fit from
a technical standpoint and then also do they
match with the theme of the neighborhood and
I have A lot of back and forth. And it can be
a lengthy process. It can be a very lengthy process.
And it depends on the criteria within that HOA.
That's right. As you mentioned, some are really
strict and some are a little more fluid. And
often, we're building in an area where there
isn't any HOA. Exactly. And those are, you're
tailoring your homes to taste. And it's true
free market at its best. Just saying, okay, what
does the market want? And with construction,
especially when you're in the pre -planning and
in the pre -permitting phase, you're a solid
18 to 24 months away from that home being sold.
Probably three months before that, you're marketing
it. So you're trying to predict where is the
market going to be? What does the market want
in terms of size and price point, number one?
What does it want in terms of style, number two?
And then once you parse it down from there, do
they want next -gen living? Do they want space
for mother -in -laws? Do they want four -car
garages? Do they want accessory structures, depending
on the scale and scope of the house? You're taking
all that into consideration. Once you've signed
off on everything, design -wise, As I mentioned,
it sees five different engineers. It's going
to see an electrical engineer to lay out the
electrical schematic and do the load calculations.
It's going to see a plumbing engineer that's
going to draw where all the gas lines, waste
lines, and supply lines go. It's going to have
an HVAC, what we call a mechanical engineer.
These plans are called MEPs. So that's three
engineers right there. And then you'll have your
structural engineer after your soils engineer.
That's why I hesitated to say five, because you
could argue it's six. because we have a soils
engineer that goes out and bores the soil and
does compaction tests and says, okay, your footers
need to be this deep and your load bearing on
this soil, maybe the soil needs to come out,
which we call over -exing. You're over -excavating
it and then putting it back at a more compacted.
And usually having third party engineers test
that during construction or watch it, what we
call lifts. So usually every foot That's down
the road. That's once we've broken ground. But
those are the things that are called out during
those tests between the structural engineer,
talking with the geotechnical engineer, working
along with the architect and the MEP engineer.
So they all do need to talk to each other. And
then the other engineer, the final engineer,
would be your civil engineer is creating your
grading plan and creating your site plan and
showing where all the water is going to go and
how the home is going to sit and how high the
pad elevations are. And that's your last engineer.
And then you submit that to the city and there's
rigorous plan checks, you might spend another
three to four months getting your building permit
issued. So they're checking all those engineering
designs and drawings and they're basically calling
out things that either contradict the drawing
or contradict one of the other professions drawing.
or is not in code, or it's a labeling convention
that is one of my biggest pet peeves when something
gets sent back to you because it was just labeled
wrong. And they fine -tooth comb it in a way
that keeps everything in sync, but also this
T wasn't crossed or this, you know, I mean, there
are some really very meticulous that don't necessarily
affect the end result, but certainly slow that
portion of the process. 100%. And in our jurisdiction,
They have 21 days once you submit things. So
every time you get a correction, you've lost
three weeks. So you pretty much start back and
they definitely 21 days starts. It starts all
over again and they reserve the right to find
new things. And sometimes it's being reviewed
by a different person. Many times it is things
might not necessarily be something that just
something that someone else stopped. Exactly.
You can be wrong. Just hot point for that particular
exactly so those are the biggest things that
kind of slow us down so when we say it's six
to ten months of pre shovel work you can see
how quickly that adds up if you're spending a
month just figuring out what you want to build
there and then a month with your architect and
then two to three weeks worth of revisions with
that architect because what he sent back wasn't
exactly what you had in mind or as time has progressed
you've decided something else is important to
you or you forgot about something so we're generally
seeing it with the architect for two to two and
a half months so we're already at three and a
half months and then it's going to sit with the
engineers and you'll have to have surveys done
topographical surveys and soils testing and those
things all take time and the 800 pound grill
in the room is that they cost a lot of money
at the end of the day we're looking at anywhere
between 12 and 13 dollars per square foot so
if i'm building a 4 000 square foot home I'm
spending on the order of $60 ,000 before my permit.
And then the permit is generally based on the
size of the home, how many fixtures are in it.
So your permit is in our market is generally
on a home like that, another 8 to 10 ,000. And
plan check fees are another 1 ,500. HOAs usually
charge a fee. So on one of our luxury homes in
South Shore and like Las Vegas is just an example
between the HOA and the permitting and all of
the professions that go into the engineering
and architecture, it's around $100 ,000. before
I move my first speck of dirt, $100 ,000. Just
a home on paper, that's all. Just a home on paper
plus a half a million dollar lot, or $400 ,000
lot, right. So there's a lot of guts and glory
that goes into before you've mobilized your first
laborer on site. So it's definitely a trying,
challenging industry. And then the horizon of
time, you're looking at six to eight months,
it takes a lot of patience. Thanks for tuning
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