MTH
#Not necessarily.
We're trying to stay away from the real large land development opportunities where we have multiple product lines.
Those definitely can carry more risk.
Certainly we do have a few but we're focused in California on more infill opportunities.
We're spending more money on building our team that can do more infill attached communities closer to the water, closer to the bay, or closer to Orange County.
We have some strong opportunities we're pursuing certainly in Colorado, in many of the Texas markets outside of Houston and mostly in the south.
So land is fully priced in most places.
There's no bargains out there.
But we have some real sharp people in our land acquisition teams throughout the country and we're still finding opportunities to fuel our growth.
Sure.
What's happened, that number bounced up a little bit and it's being caused by us completing several projects that were under development so we have a lower percentage of underdevelopment land now sitting as finished lots versus a quarter or two ago.
So that number is going to remain a little more elevated.
I thought it would actually go down and stay lower and maybe approach zero.
Right now I don't think that, that's going to happen because of that percentage of underdevelopment versus development land.
So that's a good story in that we have finished communities that can start selling, but it's causing us to expense directly a little more interest than we had thought and a little bit less is being capitalized.
So I see that number staying up in that range that we had this quarter.
Probably will go down a little bit through the year but it's not going to go to zero.
Yes, it does.
As <UNK> mentioned in his comments, Northern Cal is very strong we had a couple new communities open in the South Bay, Morgan Hill, Gilroy area, we had strong traffic, strong demand, strong pricing power.
Our communities, we have one community out in the Central Valley.
We have communities along the corridor between the <UNK> Bay and Sacramento and then we have communities throughout Sacramento, all have had strong traffic and strong demand.
Probably our best market in the entire company right now.
You know, we're really excited about our business opportunity up there and we're going to have a great 2015 in Northern California.
Well, what's opening the next couple of quarters will be land that we bought already and it's been in our pipeline now for probably over a year.
Today's current land prices don't really affect what's going to happen this year.
But certainly land prices are higher and we will have to get higher housing prices to offset that.
It varies by market and some markets it's attainable.
We have a green light on.
We're buying land.
Other markets we're certainly being more cautious.
The land market is certainly tighter than it was a year or two ago.
<UNK>.
Yes, go ahead, <UNK>.
If I could jump in here.
A couple of things are causing that improvement.
The most notable is leveraging construction overhead which is buried in cost of sales and therefore affects margins.
So that leverage is helping us improve as we grow volumes through the year.
The other thing is we have talked about particularly in the <UNK> about improving some of our operational metrics and direct construction costs.
So the other piece is some improvement particularly in the <UNK> on construction costs and then again generally speaking, we're talking about the market being stronger than last year and we are having improved pricing power so we are going to be able to increase and we have increased pricing in many of our markets this quarter.
And we're projecting that to be able to continue that improved pricing metric.
I'm not more overly concerned, you know, more so than any quarter before.
Competition is strong but we have great locations and we have great people and great product so I'm not worried about that.
I would like to clarify, though, I think I may have given the wrong perception about pricing.
We don't put any appreciation in our proformas.
We don't believe we have to get price increases to hit these margin targets that we have.
Certainly again we're looking at our backlog today and we're looking at the prices that we're at today and going forward, you know, that gives us comfort that we can hit these margin targets.
I don't want to misconstrue to anybody that we are going to have to have house prices rise to make land deals work.
That's really not what I'm implying.
Thank you good thank you.
Good morning.
<UNK>, what do you think.
I don't think we have.
Yes, I agree.
I don't think we have seen that.
Well, land prices haven't come down, but there hasn't been as much land acquisition activity and we certainly haven't bought any land in Arizona for well over a year now.
And I think for some land deals to get moving, you know, housing prices will have to rise or builders that are willing to accept lower margins will buy the land.
But I'm pretty comfortable with what we have in Arizona.
We don't need any land.
We're still making a good gross margin on the land that we own for the most part.
In California we're really more focused on infill opportunities where you have less competition from builders and we're able to get stronger pricing power.
So, you know, land is ---+ there's still quite a bit of land that makes sense in a lot of other markets throughout the country.
Thank you.
Is this our last call operator.
Thank you very much for your interest and participation.
We look forward to talking to you again next quarter.
Have a great day.
