PINELLAS PARK — National home builders are snapping up land in unfinished Pinellas County subdivisions that were stalled when the recession hit. As they get deep discounts on a commodity that's about as rare in this county as the Florida panther, the builders signal new confidence in this struggling economy.
"In Pinellas County there is a pent-up demand for new home construction. There are just a few infill sites that present a great opportunity and a great location that a national builder can go into and offer a great value on a very large home," said Joe Fontana, division president of the west coast of Florida for Ryland Homes. "We're seeing a certain stability in new home prices. We have not seen the reduction we saw in 2008 to 2009."
California-based Ryland paid $1.3 million, or about $59,000 a lot, for 22 undeveloped lots in Pinellas Park last month. The subdivision, on Belcher Road, will become Bayou Cove. Between May and August, Ohio-based M/I Homes paid $820,000, or an average of $74,500 a lot, for 11 lots in two Pinellas Park subdivisions on 94th Avenue and has nine more under contract. It is marketing homes from 2,300 square feet to 5,200 square feet for $250,000 to $430,000 in Oak Bluff and Heritage Reserve communities on its website. Four have already sold.
A Ryland model home at Bayou Cove should be open in January and house plans, renderings and prices will go up on its website as soon as possible. The homes priced in the $300,000 range will be 2,500 to 3,000 square feet.
"That area primarily has been built out geographically. It's been at least 12 to 14 years since Ryland has been building in Pinellas County," Fontana said.
In May, L.A.-based KB Homes broke ground on Lakewood Shores, a project off 31st Street S that will include 30 homes priced between $159,000 and $200,000. A cluster of six or 22 or 30 homes is out of the norm for Pinellas County, the most densely populated county in the state. Only 2 percent of the county is vacant, developable land.
Ryland's property at the corner of 90th Avenue and Belcher Road belonged to the St. Hagop Armenian Church. It held numerous fundraisers to buy almost 10 acres in the late 1980s and finally completed a $2 million church in 2007. It retained 3 acres and still has plans to build a cultural center but decided to sell 7 acres to pay down debt, according to the Rev. Hovnan Demerjian.
"There are builders who are able to acquire these lots at a huge discount and construction at a discount and be competitive with the marketplace. They are offering new construction at $100 to $115 a square foot, which is unheard of," said Roger Broderick, president of Broderick Associates, who listed the property. "Twenty-five percent of (home buyers) would prefer to have a new home and there hasn't been any opportunity to buy a new home in Pinellas County in a long time."
The size and price of homes Ryland is planning wouldn't have been feasible at the 2005 or 2006 land costs, Fontana said. With significant new construction in Hillsborough, Manatee and Pasco counties, Ryland will build 400 new homes in Tampa Bay this year. That's about a 30 percent increase from what it did in 2008 and 2009 but less than half the 1,000 homes it built annually in the area in 2005 and 2006.
Before the recession the home builder was cranking out developments with 100 to 1,000 new homes. Now it's looking for infill opportunities with as few as 15 lots. It has a link on its web site seeking landowners in 28 markets across the country who are interested in selling tracts of 10 acres or more.
Broderick sold five lots from a Pinellas Park subdivision he owned with several partners and brokered the sale of six lots owned by another investor to M/I Homes. He has 15 more lots under contract.
"When times get tough in real estate it goes back to location, location, location and that's really what we play off of," said Marshall Gray, area president of M/I Homes Tampa. There are people who want to move to a new home but don't want to leave their schools, neighbors, family and area businesses. So when the rare new home goes up in an area that was built out years ago, the homes are in demand, he said. But because the appraisals are based on sales of existing homes, these new homes won't go for as much as a new house in a development full of new houses.
"Unfortunately for the home building industry, especially on infill projects, you have to price where you can get an appraisal" or the banks won't lend the money to finance it, Gray said.
Fontana at Ryland agreed that securing the loans can be harder than finding a buyer.
"While it's still very difficult, for qualified homeowners there is financing available," he said, adding that those who do qualify can get a great deal. "Interest rates have not been this low for most of our adult lifetime. These homes probably in the boom would have gone for $150,000 to $250,000 more than what they will go for today."
Broderick said, "It is encouraging that our national builders are seeing a window of opportunity and buyers are getting great deals."