eNews | Summer 2007

Builders Provide
Sunny Days For Buyers
“Prices Dropped $50,000”, “Rock Bottom Prices”, “Prices Slashed” – these are just a few of the headlines used in today’s new home ads to capture potential homebuyer interest. The free cars, boats, and huge incentives offered in late 2006 have been replaced with lower prices and more modest concessions. Many of the large publics started out the new year by switching pricing strategies – parlaying those large incentive dollars offered at the end of the year into “rock bottom” prices at their new home communities. Most builders continue to offer some moderate incentives – the minimum of what homebuyers are expecting today – but gone are the days of excessive incentives offered through an array of choices.

It appears from the January figures that this new sales strategy is paying off for many new home communities. These projects, some of which lowered prices 10% to 15%, reported a significant increase in traffic and stronger sales because of the lowered prices. The typical “post-Super Bowl” up tick in activity continued to enhance this stronger sales environment.

The new lower-price strategy of the public homebuilders has caused many of the smaller private homebuilders to adjust prices accordingly – obviously continued good news for the consumer. But homebuyers beware – as the inventory of new homes continues to be depleted and fewer new home projects come on line, the large price discounts will become harder to find with prices expected to stabilize by the end of the year.

Time to Reposition?
Helping Sales Spring in a Flat Market
In a tough market like this, many of the region’s largest builders seem to be making a hasty retreat. Most public builders are interested only in maintaining volume, which has resulted in significant price declines and high levels of incentives. Small and mid-size builders have been able to be much more nimble in truly repositioning their communities (and not just dropping prices) to fit the market. After all, in today’s market the biggest competition in many cases is not from other builders, but from the resale market. However, when it comes to proper positioning, new home communities have the advantage.

For example, Meyers Builder Advisors was recently approached to reposition an infill project to increase sales. This community was a strong example of high-density, relatively affordable residential living. In fact, this builder did such a good job in developing the community that homes should have been brisk in any normal market.

To reposition this project, we had to search for a new pool of potential buyers who were still active in the market and show value in today’s shifting market. For this particular project, the Asian buyer wasn’t initially targeted by this community, even though Asians represented a significant demographic in the area. With a targeted broker and community outreach program, a little tweaking to the models, along with some specific, directed incentives, sales at the project rebounded to a more normalized pace.

30 Years in the Making: Headlands Reserve, LLC.
Makes Waves with the Strand at Headlands
After 30 years of planning, The Strand at Headlands in Dana Point has captured the essence of Southern California coastal living. Slowing housing market? Not based on sales at this exclusive community. Offering the last significant undeveloped ocean front property in Southern California, The Strand at Headlands has met with phenomenal success. The first phase of 25 custom home sites released in November of 2006 sold out within 72 hours for an amazing $148 million. Prices for the 10,000 sq. ft. Phase I lots started in the mid-$3 million’s and went up to nearly $8 million for front-row lots (situated just 25’-30’ above Strand Beach).

“The demand for oceanfront is there,” says Sanford Edwards, the developer of The Headlands community. “There are only so many miles of coastline.” The Headlands encompasses 121 acres of prime real estate including the 6-acre Strand Beach and over one-mile of ocean frontage. The community plans 118 custom homesites with lots offering white water, white sand, or blue water views in two distinctive neighborhoods, North Strand and South Strand. The Headlands will also include a 90-unit luxury hotel and spa which will overlook the Dana Point Harbor. A 1.6-acre retail and commercial center, as well as five public parks offering over 68 acres of open space will complete the community.

“When we first took a look at pricing the lots at The Headlands, we were excited by the nearly unlimited potential for the community. It’s not everyday that you have the opportunity to be part of such a landmark piece of property,” notes Michelle Wolkoys, Principal at Meyers Builder Advisors. The community will feature all the necessary amenities demanded by this high-end lifestyle homebuyer including 24-hour gate-guarded security, direct private pedestrian and golf cart beach access, and a 9,000 sq. ft. beach club/recreation center. In addition, miles of hiking trails, parks and conservation areas will create a truly unique living experience.

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