Building an inventory of new homes




Taylor Morrison's Francesco model at Haddington in Country Club East, Lakewood Ranch. Staff photo / Harold Bubil

Most everyone in the residential real estate business is decrying an apparent “lack of inventory,” or houses to sell.

Builders are in the position to do something about it. In another sign that the housing recovery is continuing, well-funded builders are constructing “inventory” houses again.

“The market, in general, is improving,” said Mark Davis, sales director for Sam Rodgers Properties/Arthur Rutenberg Homes. “Standing inventory of both used homes and new are at 10-year, pre-boom lows.

“Builders are really just manufacturers of a product, and when the demand is low, we don’t produce or take the risk.”

An inventory house is something like a spec house — a structure built on a contractor’s speculation that some as-yet-unknown buyer will come forward to purchase it.

In fact, just a few days ago, Modus Custom Residences, a Sarasota custom building firm led by Steven Hanson, began construction of a 4,400-square-foot, $4.5 million “spec” house on the Gulf at 3801 Casey Key Road.

But that will be a “one-off” house. Inventory houses are a little different — they often are production models built in new-home subdivisions. In such places, building an inventory home is not a giant leap of faith for the builder, but instead is a statement on his part that ready, willing and able buyers are in the market, and that some of them do not want to wait to move into houses that can take nearly a year to build.

With the inventory house, buyers can typically move right in — perhaps after choosing carpets, tile and paint colors.

“We have definitely seen a greater interest in move-in-ready homes,” said Cammie Longenecker of Taylor Morrison Homes. She said her company “never stopped” building them since the boom years and has 80 “Showcase homes” spread through most of its 20 communities throughout the region.

“We have seen the value all along in having a variety of Showcase homes,” she said. “But one thing that has changed is the number of people who were in homes that they were unable to move, they have moved, or homes have foreclosed, and they are now back in the market looking to buy.

“With the improvements in the market, the less-than-four-months supply of homes available, we will continue to invest and take advantage of the increased interest in move-in ready homes.”

Taylor Morrison is building inventory with houses that range from 1,500 square feet to more than 2,800 square feet. At Haddington in Lakewood Ranch, its Showcase homes — the Luca, the Francesco and the Bella — range from 2,500 square feet to 2,885 square feet.

“We are definitely seeing an interest in medium-sized homes rather than the smaller homes that have been popular over the past few years,” said Longenecker. “The size is not necessarily what the buyers are looking for, but rather the interest in finer details.”

High-end, semi-custom builder John Cannon Homes has re-entered the inventory market with the “Macalla,” an inventory house “West of the Trail” in Sarasota. This house is on Wisteria Street at Osprey Avenue.

“We saw interest in the custom-home market begin to pick up in March 2011,” said John Cannon, whose company started construction of its inventory home in October 2011 and completed it in July.

Cannon said “savvy buyers” pounced when they saw the glut of homes evaporate.

“They realize time is of the essence, and prices are on the rise,” he said. Such buyers also want a new home with the latest “green” technologies.

“Choosing the right location was key, and, of course, the style of architecture was very important to us once we decided upon this West-of-the-Trail location.”

Cannon said his buyers are seeking smaller houses “with a higher level of finish.”

The house he built on Osprey Avenue has 3,300 square feet under air, which is a bit modest for a Cannon home. The “higher level” of quality is reflected in its $1.3 million price.

The house has three bedrooms, three baths, a great room, dining room, kitchen, study, upper-level bonus room and a lanai with summer kitchen that overlooks a pool and spa.

Cannon has just completed two models in Lakewood Ranch — one in Haddington, with four bedrooms and 3,325 square feet at $979,900 furnished, and another in The Lake Club, with three bedrooms and four baths in 3,399 square feet, priced at $1.2 million, furnished.

Another new Cannon model is in Legends Bay at IMG Academies, near Bradenton. Priced at nearly $800,000, it has four bedrooms, four baths, a great room, dining room, bonus room, summer kitchen, and a pool and spa.

But these are furnished models — not for immediate move-in, and absolutely no color or tile selections are available.

Buyers of inventory houses have a limited opportunity for personal selections in return for being able to move in faster.

“We have numerous homes in the building process at different stages, from permitting to ready to move in,” said Taylor Morrison’s Longenecker.

“So if a buyer makes the purchase prior to the finishes, they can have as much input to the selection as they want.”

At the same time, “The likelihood of personal selection can be limited,” said Longenecker. “However, we include the finer touches in all our Showcase homes. The buyer does have the advantage of move-in now, with today’s attractive interest rates and pricing.”

Cannon and Longenecker said their inventory homes are built with reserves or funds from investors, not bank loans.

Whether they are commissioning a new house or buying one from a builder’s inventory, McMansions are out, said Davis.

“The market in general appears to be building/buying smaller homes,” he said.

“The McMansions of the boom years are gone. Most customers I see, both for Sam Rodgers Properties and our Arthur Rutenberg Homes franchise, are asking for homes of less than 3,000 feet,” with a cluster between 2,300 and 2,800 square feet.

“Of course, there are still pockets of larger homes being built and sold,” said Davis, “but as far as I can see, they are not the normal.”

“During this time of year we really plan for our northern visitors and have Showcase homes that will be attractive to that buyer looking to relocate to Florida,” said Longenecker.

Harold Bubil

Recipient of the 2015 Bob Graham Architectural Awareness Award from the American Institute of Architects/Florida-Caribbean, Harold Bubil is real estate editor of the Herald-Tribune Media Group. Born in Newport, R.I., his family moved to Sarasota in 1958. Harold graduated from Sarasota High School in 1970 and the University of Florida in 1974 with a degree in journalism. For the Herald-Tribune, he writes and edits stories about residential real estate, architecture, green building and local development history. He also is a photographer and public speaker. Contact him via email, or at (941) 361-4805.
Last modified: December 17, 2012
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