Monday, April 23, 2018
Business

Can developers breathe life into zombie subdivisions?

Around Tampa Bay, zombies show signs of life. They were new subdivisions, conceived by housing boom excess, that died before they were ever born. Vistas of flat land broken only by remnants of permit boxes and lonely streetlights mark their remains. Trash litters desolate, overgrown streets that lead to nowhere — except to memories of the go-go days. But now, builders see all this as ground zero for a bay area housing renaissance, and they are buying up lots by the thousands. They have yet to start much building. But they think they will soon.

"They're anticipating in 2013 that we'll get into a full-blown recovery," said Tony Polito, a housing consultant with Tampa's Metrostudy, a national company that tracks the construction industry.

For a region long accustomed to nothing but bad financial news, Polito knows the burst of lot-buying seems hard to comprehend.

"It seems odd to talk about replacing developed lots in the midst of the worst housing downturn since the Great Depression," he said.

"But we are at a point in the market where builders and developers are beginning to do exactly that."

Some housing and real estate experts believe the lots will be gone in 18 months.

"The pickings are slim," said Bill "The Dirt Dog" Eshenbaugh, owner of the Eshenbaugh Land Co. "There's a lot of demand for these. The builders are in a little bit of a sweat right now."

Lennar Homes has bought about 2,000 lots in the bay area in the past 24 months. The firm is building in more than 25 communities; home prices range from $90,000 to $400,000. The 2,000 lots will last Lennar about two years, based on closings on about 1,000 deals last year.

Mark Metheny, president of Lennar's Central Florida Division, said cleaning the developed land is cheaper than developing raw land, adding: "The price makes sense. They're fairly complete."

Lennar's busiest areas are New Tampa, southern Hillsborough and central Pasco. Although lenders tightened mortgage standards, Metheny is seeing an uptick in consumer confidence.

"We're getting a lot of demand," he said.

Triple Creek, a development in eastern Hillsborough County, is showing signs of life again.

The market tanked as roads and signs went up on the 1,000-acre Riverview site. Developers defaulted on a $37 million loan in 2008. A few homes, barely finished and then vandalized, sat on the development until the county ordered them demolished.

A Realtor blogged about the land in 2008, calling it a ghost town. She posted a slide show of photos — overgrown grass, toppled trees and broken windows — accompanied by Chopin's Funeral March.

MI Homes bought the property last year for $15 million and started clearing the land last month.

Still, lot sales have yet to translate into much building activity.

As of June 2011, 338 active subdivisions had not started a single home in the prior year in Hernando, Pasco, Pinellas and Hillsborough counties, according to an October Metrostudy report.

But the supply of new, unsold homes in those 338 subdivision had fallen from 664 homes in June 2007 to 122 units in June 2011.

"Cleaning up the standing inventory is a major factor in moving forward in a housing recovery," Polito's report said. "At the current pace, the standing inventory in these subdivisions should be cleaned out by mid 2013."

Builders started construction on 995 homes in the bay area in the fourth quarter of 2011, a 19.4 percent increase from the fourth quarter of 2010.

The vacant subdivisions farthest from the urban areas and those having high debt on community development district bonds will take longer to sell, experts say. Price and location are the drivers of sales.

To survive the Great Recession, many builders designed smaller, lower-priced houses to attract a bigger pool of buyers. Some builders shuttered their land divisions after the housing crash, but many have restarted the operations.

Taylor Morrison Homes builds homes from Pasco County to Naples, priced from $85,000 to $700,000. The firm has bought more than 1,500 lots in the past six months and plans to bring them to life through 2014.

The firm is seeing a decline in development opportunities on Florida's West Coast, said spokeswoman Katy Walker. She described the land buys as "very strategic, that can come to market quickly."

Large swaths of land aren't the only areas gaining interest.

St. Petersburg lacks large tracts of open land, but Walker said the firm is scouring the city for property after successfully selling its Sun Ketch Townhomes in the Old Northeast neighborhood.

The community opened in October 2011; only 10 of 42 units remain unsold, she said. Prices are above $200,000.

"People want to be close to downtown," Walker said. "It's close to everything."

At the end of 2011, Pinellas, Pasco and Hillsborough counties had 14,400 developed lots ready for building, down from 17,900 at the end of 2007.

Polito stressed that job growth and the proper pricing of unsold, new homes will be the driving forces behind more lot sales and home building.

"It's a good thing that we're working our way through these developed lots," he said.

Mark Puente can be reached at [email protected] or (727) 893-8459. Follow him on Twitter at twitter.com/markpuente.

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