Out of abandoned communities, cheaper homes are born
Out of abandoned communities, cheaper homes are born
They’re victims of the recession: unfinished communities scattered across the Charlotte area.
But for homebuilders like Lennar Corp., they’re an opportunity.
Just ask Jon Hardy.
Hardy, president of the Miami-based company’s Charlotte division, said that this year Lennar has built homes in nine Charlotte-area communities that others started but couldn’t finish.
That represents a spike in Lennar building in such developments: The company built in only about three established Charlotte-area communities during the previous two years.
For Lennar, the focus is still on “raw land,” building housing communities from scratch, Hardy said.
But such projects are few and far between these days, thanks to the housing market slump. For example, this year the company has only built in one new neighborhood, Springfield, which Crescent Communities started but never completed in Fort Mill, S.C. Hardy said Lennar is under contract to start two new Charlotte communities before year’s end but would not say what they were.
“It all depends on the submarket,” Hardy said. “In south Charlotte you may have to buy raw land because most communities are successful and builders are moving through it. But in southwest Charlotte’s there’s already a lot of lots in the ground.”
In a tough time for the homebuilding industry, partially built communities are giving builders a chance to make some money.
“Given the economy, we’re able to go in and work with developers and banks to put the right value on the remaining home sites,” Hardy said.
Lennar is not the only homebuilder in Charlotte picking up where others left off.
Alan Simonini, owner of Alan Simonini Homes in Charlotte, said he began building this year in Serenity Point, which was developed in Tega Cay, S.C., by Cornelius-based Ark Group.
Simonini said that after the economy turned, Ark was no longer willing or able to pay the price it had contracted for home lots.
“Then the developer’s left with this land and they need to find another builder to a make it work, and in this case it was us,” Simonini said. “They (developers) won’t leave if they’re selling houses and making money.”
Simonini said he’s working on a $549,000 spec house that should be completed next month in Serenity Point.
Hardy said building in an unfinished community has its advantages. For one, the infrastructure, such as roads, sewage and other utilities, are already in place. Also, given the current housing market, great deals can be found on available lots, especially in communities partially finished and without a builder, Hardy said.
For example, Lennar started building homes in Monteith Place in Huntersville at beginning of the year, Hardy said. Atlanta-based Beazer Homes was the original builder, but the company pulled out of the Charlotte market in 2008. Hardy said Lennar bulk-purchased about 50 homes sites from Beazer last year.
“We received lower-than-market pricing for the home sites,” he said.
That allowed Lennar to equip its new homes with granite countertops, hardwood floors and ceiling fans and sell the homes at competitive prices, from $150,000 to $250,000, Hardy said. Beazer’s homes started at $180,000.
Since January, Lennar has sold about 25 homes in Monteith Place, Hardy said.
Berewick in southwest Charlotte is another established community Lennar started building in this year after Beazer and M/I Homes pulled out.
Hardy said the developer, Pappas Properties, originally had about 60 95-foot home sites but reduced them to 65 feet so Lennar could build smaller, more affordable houses.
Hardy said Lennar priced its homes between $190,000 and $240,000 and since January has sold about 18. Most of Beazer’s and M/I’s homes were priced started in the $290,000s.
In October, Lennar bulk-purchased the majority of the lots at Wellesley in Mooresville from the bank, after the original builder, St. Lawrence Homes, filed for bankruptcy in 2009 and pulled out. Lennar’s homes are priced from the low $200,000s and the company has sold about 20 since the beginning of the year, Hardy said.
“This is looking for value opportunities in the marketplace,” he said. “If you can research and figure out where people are buying and at what price point, you can capitalize on the opportunities. And that’s what we’re doing.”
Arthur Rutenberg Homes, a Clearwater, Fla.-based homebuilder and franchiser, is also picking up where other builders left off in the Charlotte area.
Mitch Genda, president of Paragon Homes of Charlotte, an independently owned and operated franchise of Arthur Rutenberg Homes, said he started building in Fort Mill’s Springfield community after custom builders, including Regal Homes and New South Homes, backed away.
“When they stopped doing business we saw an opportunity,” Genda said. “There was nothing there for customers to buy, no finished product, and it made sense for us to move in.”
Genda said Paragon completed a model home last year and has five homes under contract and one under construction.
“We’re helping turn things around and bringing the neighborhood back to life,” he said.
But Paragon is doing so carefully, he said, and only building homes once they’ve sold.
“Our only speculative construction has been the fully furnished model, where we have a full-time sales staff,” he said. “We’re taking a conservative approach.”
Genda said his homes are priced between $450,000 and $700,000. The previous builders’ homes were between $850,000 and $950,000, he said.
“There’s about 100 lots available and future phases are planned, so we’re definitely interested in talking with the developer about that,” he said.
Boykin can be reached at [email protected].