GlobeSt.com: How would you define urban homebuilding?

Friedman: Urban homebuilding is a matter of location, product type and marketing focus. We're marketing high-density housing to specific well-defined groups. So if you have an urban focus you have to focus on niche marketing and recognize that your product needs to be designed to the people who are going to be living there.

GlobeSt.com: What are some examples?

Friedman: In Edgewater, NJ half or more of the buyers will be of Asian descent and that's typical of an urban market. Ethnicity is a very determining factor in urban locations. You have areas where there's a heavy concentration of Latin people or of Southeast Asians or Koreans or gay people or people just starting out in their work careers. In Hoboken, the average age of our buyers is 26.

GlobeSt.com: What kind of marketing efforts do you do?

Friedman: We don't exclude anyone from being a buyer but we do target the market we think is going to respond most readily to the product. We design a product that's going to appeal to a defined group. Second, the choice of advertising media is very important. If you don't market in ethnic media you miss out in presenting your product to those groups. And in marketing for the Hoboken project, they respond to web-based efforts. To reach them you need a good website that gives all the information because that's the way they like to look at things.

GlobeSt.com: How different is it developing in the Northeast as opposed to the Southeast?

Friedman: In the Northeast you have exceptional political, financial and environmental obstacles to development in almost every site. In the Southeast sometimes you may not have one or more of those obstacles to overcome, but you always have something and the way you solve the problems is the same. The inherent opposition that you encounter to development is much greater in the Northeast where you have people opposed before they know what you're doing and whether or not it affects them. For the most part, in Florida people oppose projects that affect them.

GlobeSt.com: How do you see Tarragon moving geographically?

Friedman: The markets we are in include a pretty substantial chunk of all of the residential demand in urban areas. We don't feel we are under any pressure to go into additional markets.

GlobeSt.com: What are your views on the housing bubble?

Friedman: Anyone who doesn't realize how different housing prices are from commodity prices is foolish. Housing prices are much, much stickier than prices of technology stocks or tulips or gold because people consume housing as well as invest in it. Prices can go up or go down. Housing is a particularly local commodity. People buy based on supply-and-demand factors in the particular location they're interested in. The fact that prices are low in Cleveland has almost no affect on what people will pay in New York. Prices in the coastal areas--where most rapid price appreciation has taken place--are the areas where building restrictions are greatest and land prices have gone up the most. It's hard to say that there's any law or economic compulsion for lower prices. There's a lot of room for prices to increase as long a regulations increase, as long as barriers to development increase and as long as the attractiveness of cities continues. In New York, the number one reason for price increases is the decline in crime. The whole city is opened up and you've got new construction all over. You've got the same factors at work in places such as Miami; Fort Lauderdale; San Francisco; and Washington, DC. It shouldn't be any surprise that prices have gone up.

GlobeSt.com: So you don't see the bubble bursting?

Friedman: Most of the bubble talk comes from Wall Street analysts who see great volatility everyday in what they do and it's almost a form of jealousy that there's an industry that has much lower volatility. That's not to say prices can't go down. It just won't be a bursting bubble. The rising population, the rising wealth in America, the rising construction cost and the cost of land are the four pillars under rising housing prices. Knock off one of them and the structure will stand.

GlobeSt.com: What do you see for 2006?

Friedman: Our focus this year will be on marketing our new properties and getting new developments under way. Our energies and focus are ensuring that as volume increases the quality is also maintained and that the projects are profitable for our shareholders. The biggest issue facing Tarragon is recruitment. We need to add to our staff as our volume goes up and we want to get the very best creative developers and marketing people to join our team.