Pity anybody with the misfortune of sitting on a panel with Toll Brothers CEO
Bob Toll. Speaking to a packed audience, Toll was on form,
especially with his whistle-stop tour of the entire US, talking about markets
which are doing really well (New York City, Connecticut, Washington DC) and
those which are in the pits (Boston, suburban New Jersey, Phoenix, Las Vegas,
Michigan – and, of course, Florida.)
In other words, you can’t just throw a dart and make money in the property
markets these days, as you could at pretty much any point over the past 10 years.
But Toll is still constructive over the long term: "Right now we’ve got
a demand problem, but generally, we’ve got a supply problem," he says.
"You’re going to come to see housing represent 45-50% of household income,
as it does in Europe, rather than the 35% we see here. But I don’t know when."
Other Toll observations which rang true:
- The rise in urban residential real-estate is not a speculative bubble,
but rather demographic: "a desire for urban living". 35-year-olds
are choosing to raise a family in an urban setting now, whereas 15 years ago
they would always move to the suburbs.
- Even as Americans get older, they have no desire for smaller houses: retired
couples want more space, not less, after the kids leave home.
- There’s still no desire for green houses. "We tried to experiment with
selling energy-efficient homes, and completely flopped compared to selling
more moldings," says Toll. Even something as simple as a day-night thermostat
doesn’t sell when compared to, say, a gold ceiling rose for the chandelier.
Energy efficiency might be the low-hanging fruit when it comes to reducing
US carbon emissions, but there’s no indication at all that Americans want
to pick it.