Landlocked Homes: Lot a Dirt

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Case

Reference no. RE137

Subject category: Case Method and Specialist Management Disciplines

Authors: Douglas Abbey (Stanford Graduate School of Business, Stanford University); Chris Mahowald (Stanford Graduate School of Business, Stanford University); Max Lamont (Stanford University)

Published by: Stanford Business School

Originally published in: 2012

Version: 15 February 2015

Revision date: 19-Jan-2017

Length: 22 pages

Data source: Field research

Topics: Real estate investments; Risk assessment; Return on investment; Homebuilding; Investment

Share a link: https://casecent.re/p/110615

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Abstract

In March 2008, a group of investors considered purchasing 8,300 residential lots in 11 states from one of the largest US homebuilders, at a price of 10 cents on the dollar. The deal would also involve purchasing a partially-built condominium complex, also at a substantial mark-down from the amount already invested. This case describes the residential real estate development business and the role of land in homebuilding. It describes the excesses leading to the housing crisis in 2008. The case is based on a real situation, but company names and some details have been changed.

Location:

USA

Industry:

Real estate, homebuilding

Other setting(s):

2012