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Can You Feel the Optimism Shift in Builder Mentality?

Written by Peter L. Mosca on Tuesday, 13 April 2010 7:00 pm

If you hadn't noticed, there have been some interesting reports lately regarding builder activity across the land. For everyone who wants the economic recovery to continue moving forward, this is good news. For starters, Toll Brothers, Inc., a leading builder of luxury homes, has stepped up its land buying activities of late, purchasing or putting under control in the last four months approximately 3,000 home sites via mortgage note purchases and direct acquisitions of real estate, including Hasentree in Wake Forest (NC), the area's premier residential golf course community.

"The acquisition of this premier community and others reflects our strategy of opportunistically securing challenging luxury sites to fuel the future growth of the company," explained Douglas C. Yearley, Jr., executive vice president. Toll Brothers, who purchased Hasentree from a financial institution, acquired the community's remaining 318 home sites, its Tom Fazio designed golf course, walking trails and 13,000-square-foot Family Activity Club.

"We continue to work cooperatively with our partner banks and dozens of other financial institutions, as well as builders and land developers, to structure creative solutions to distressed land deals at all stages," added Frederick N. Cooper, senior vice president of finance. "We are purchasing real estate directly as well as acquiring mortgage notes for sites at all stages of development, ranging from properties where construction has yet to begin to communities in mid-stream."

Another sign that builder mentality is showing signs of optimism is the recent announcement by Hovnanian Enterprises, Inc. that its subsidiary, K. Hovnanian Homes, closed escrow on a 5.12 acre single family detached home development less than a mile from Carlsbad State Beach in Carlsbad (CA). Located just east of the I-5 Freeway, the development was previously owned by a trust represented by US Bank.

"We are very excited to develop a new home community that will create a causal seaside lifestyle where residents can walk to their favorite restaurants and stores or take a sunset stroll down to the beach," said Wally Miller, Area President for K. Hovnanian Homes. "It's the new home package that people with the goal of moving up have been waiting for in Carlsbad."

Scheduled to open Spring of 2011, the development will offer four, two-story floor plans with one plan featuring single-story living space with a second floor loft. Home designs will showcase up to approximately 2,978 square feet. Pricing has yet to be determined.

Another company liking the current state of the market is New Home Star, a new home sales and marketing company, which recently expanded into Raleigh and currently manages full sales and marketing responsibilities for 21 new home communities in that area. Since its inception in 2007, Chicago-based New Home Star has expanded into more than a dozen cities across North America.

"It's an obvious need that we're very capable of filling. We recruit, train and manage the top associates in a market and provide them with the best operating tools in the industry," explained David Rice, president. "We provide our builder partners with the look and feel of an in-house sales team, but with all of the advantages of outsourcing to a specialized, national organization."

These are only a few examples of some in the building industry recognizing that the time may just be now to get back into the market - and to get back into it in a big way.

[Note: Toll Brothers, Inc. operates in 20 states, For more information on K. Hovnanian's Southern California communities, New Home Star operates in 12 markets, managing over $500 million in sales revenue,]

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