Sunday, February 07, 2010
Builders have high hopes for housing
Some builders believe low interest rates and tax credits could boost sales of new houses.
Photos by SAM DEAN The Roanoke Times
Cornerstone Homes, a Richmond builder, bought the Orchard Villas development at an auction last year and plans to complete the project.
Photos by KYLE GREEN The Roanoke Times
An exterior view of The Villas at Botetourt in Troutville.
Designer Nan Sosebee readies a model in the Orchard Villas community. Preparing the model homes was among the first steps to bringing the Orchard Villas to its feet.
Photos by KYLE GREEN The Roanoke Times
Bruce Bowman hangs a shutter on the outside of a new town house.
Photos by KYLE GREEN The Roanoke Times
Dwayne Paden (left) and Keton Martin, employees with Parsell & Zeigler Construction, clear snow from the front of a new town house construction project.
The latest from The Ticker blog
Never mind the past year's dim real estate market. Optimism runs high at one Bonsack community.
On a recent afternoon, neighbors played cards in the roomy clubhouse, the community's entertainment haven.
Just across the street, designer Nan Sosebee lifted framed wall art, moved dressers and turned tables, spiffing up a model home that no potential buyers had visited for at least a year.
The doors of the two-story house, named the Chateau, now are open to potential buyers for browsing and ultimately sales, the builder hopes. Another model home, a one-floor Canterbury design, will open in April.
Preparing the model homes was among the first steps to bringing the Orchard Villas to its feet. Cornerstone Homes, a Richmond builder, bought the lots surrounding this 68-home community in November for $1.9 million, after offering the highest bid on the property at a public auction in September, according to deed documents.
The lender foreclosed on the previous owner, Orchard Villas LLC, for the property off U.S. 220, leaving 10 homes unfinished and a vacant lot behind it that could hold at least 30 more homes.
Roger Glover, a partner in Cornerstone Homes, is taking a chance that demand for new homes will increase, albeit slowly, this year.
His company is making a push to sell the unfinished one-story villas in Bonsack and begin construction this spring for an additional 30 homes.
Thaw on the way?
Some builders, like Glover, believe that a perfect storm of low interest rates and home buyer tax credits this year could lift sales of new houses out of the dark hole of 2009. Still, builders say it could be a while before the market turns robust again.
The ground appears to be thawing for some local home builders after few houses rose out of the dirt last year.
Single family home building permits in the Roanoke Valley dropped 40 percent in 2009, compared with 2008, according to the Roanoke Regional Home Builders Association. Similarly, sales of homes across the Roanoke Valley decreased 6 percent in 2009, reported the Roanoke Valley Association of Realtors.
The home sales market took a nosedive before the national recession hit, creating a glut of new home inventories across the country. The country's economic woes did not help the real estate market. With rising job loss, lackluster consumer spending and troubles in the mortgage market, last year was treacherous for real estate, particularly home builders.
"A year ago, you couldn't find anybody who wanted to talk about building a house," said Brent Fortenberry, a Roanoke area home builder and president of the Roanoke Regional Home Builders Association.
This year could be slightly brighter. While housing starts declined nationally in December, according to the U.S. Commerce Department, building permits climbed, a signal of future confidence.
Many builders are counting on federal tax credits to fuel demand for new houses. The credits, extended and expanded beyond an original December deadline, are available to first-time home buyers and existing home owners who sign a contract for a new home by April 30. People who buy their first home could receive $8,000, while existing homeowners who purchase a house could receive $6,500.
These tax credits are driving construction of eight houses at several local communities owned by Boone Homes. Houses ranging from $275,000 to $500,000 are going up at the builder's Southwest Roanoke County developments, including Stone Manor, Hampshire, The Groves and Devoncroft. In Roanoke, Boone Homes also is building one-floor homes priced at $500,000 at another community, the Coach Homes of Southwood.
"Our goal is to have as many homes as possible finished or close to being finished by the end of March," said Alexander Boone, president of Boone Homes.
To be eligible for a federal tax credit, buyers must put a house under contract by April 30, and the contract must close by June 30.
Other builders are focused on building and selling lower-priced homes. They realize that buyers may be drawn to houses priced at $150,000 and $200,000, because these prices appeal to first-time home buyers and may compare with low-priced foreclosures that are flooding the market. Foreclosure filings climbed 351 percent for the Roanoke metropolitan statistical area in 2009 from 2008, according to RealtyTrac.
Parsell & Zeigler Construction Co., a Roanoke-area builder, has targeted its efforts at first-time home buyers for the past few years. Since 2007, the number of homes sold by Parsell & Zeigler has been flat, but Dianne Zeigler, an owner, said the company is ramping up building this year.
Last year, it cut back construction of $350,000 and higher houses at Smith Mountain Lake, because the high-end market stalled.
Still, the company is starting construction of 166 town homes and one-story patio homes off Dent Road in Roanoke County, priced at $150,000 to $200,000. It's also moving forward with 34 Troutville town houses, ranging from $140,000 to $190,000.
Another group of ranch, bilevel and colonial style homes on Green Ridge Road in Roanoke County will be complete in time for buyers to snag the federal tax credit by its deadline, Zeigler said.
First-time home buyers are more likely to snatch up a new home now, because they don't have a previous home to sell, she added.
Still, "there's less profit" in building low-cost homes, she said, and "you have to watch your costs."
That requires finding inexpensive land for building and designing homes with amenities that appear expensive, such as using brushed nickel instead of white appliances, Zeigler explained.
Taking a gamble
To be sure, not all buyers are shying away from pricier homes.
Last summer, Kriss and Cheryl Myers bought a custom home at the Preserve at Two Ford, an environmentally focused development in Southwest Roanoke County.
The total price tag for their farmhouse-style home is between $600,000 and $700,000, and it includes some unique upgrades, such as a copper hammered kitchen sink, dark granite countertops and a first-floor master bedroom.
The Myerses, who have two young adult daughters, expect the three-bedroom home to be complete by June. After a two-year home search, they opted for a newly constructed house because "we couldn't find what we wanted where we wanted it," said Cheryl Myers, a substitute teacher. Kriss Myers works in sales for General Electric Co.
But they haven't yet sold their current house in Roanoke County. They plan to put it on the market in March.
"It is a gamble, but I don't know what isn't anymore," Cheryl Myers said. "We are very aware of the economy. We are lucky enough to both still be employed. ... It just felt right."
Hopes for Orchard Villas
Back at the Orchard Villas, the lag time before the sale to Cornerstone delayed Joyce Watson's move to Bonsack by a year. Watson, 81, who was living near Boone, N.C., planned to move to the Roanoke Valley to be close to her son.
In late December, she finally settled into a $285,000 one-story home at the Orchard Villas, complete with three bedrooms, a sunroom and a two-car garage.
Watson first signed a contract for an unfinished home at Orchard Villas in 2008. After the builder's foreclosure, all work stopped. Residents who already lived there and kept the community's homeowner's association afloat filled Watson in on the situation.
Though at least one buyer with a previous contract walked away, Watson stayed put. Officials with Cornerstone contacted her after the company bought the development. Luckily, Watson's North Carolina home, located in a golf course resort community, sold quickly for $250,000.
"I had just made up my mind that I wanted to live in this [Orchard Villas] community, because I liked what they offered," she said. "They have activities, a fitness room, a swimming pool; that was a big plus."
Glover is hoping new buyers at Orchard Villas will feel the same way. These mostly one-level homes start at $250,000 and could rise to $300,000, depending on upgrades that buyers choose.
The villas largely attract baby boomers who no longer want to mow the grass or plant flowers, Glover said. However, some have been hit hard by the stock market's decline and problems selling a previous home, he said.
Despite these realities, Glover believes consumer confidence is rising. Sounding like a salesman, he said he wants to put the new villas in front of potential buyers as the market slowly improves, and before these "windows of opportunity," such as tax credits and low interest rates, are closed.
