We are a big apartment developer. We’ve been telling subs and vendors to bend over and reduce pricing for 2+ years now. And it’s working. Our total cost per unit on new projects is down significantly vs projects we started 15 months ago. That’s how we’re getting deals capitalized.
In the apartment game, the fuck you response will put you out of businesses. Starts are off 50-75% in most markets. We had a meeting with one of our biggest GC’s a while back when interest rates rose. JP Morgan had just bailed on a job for us as equity despite having a signed term sheet. I stood up in front of 20 people at their office and walked through the math on a white board as to why something seemingly as innocuous as the 10 year jumping from 1.5 to 4 meant every line item in their budget had to come down 20-30%. And that every deal the thought they had in their pipeline was gone. This was in summer 2022. This group understood, got on board with us, and drank the koolaide on cost reductions with us. We’ve been able to keep each other in business the last three years because of it.
I suspect homebuilding isn’t far behind.