Tag Archives: qualified new home buyers

New Normal: Design Does Matter

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Take a look at the recent potential small-lot single family projects in the Bay Area and you might notice an interesting trend… while most people would expect the average sales price for a typical small-lot single family home to track lower as the home is placed on a smaller lot, there is a point at which the home-buying market no longer differentiates between lot sizes.

Homebuilders selling homes on a 6,000 square foot lot versus a 5,000 square foot lot see a large difference in cost and purchase price, and the same goes for builders selling homes on a 5,000 square foot lot versus a 4,000 square foot lot.  However, right now in the Bay Area, when a builder drops its lot size below 4,000 square feet, the market levels out.  The design on the inside of the house dictates fluctuations in cost and asking price, not the lot size.

For example, during the peak of the homebuilding market in 2006 in San Ramon, floor plans were of less importance to attracting loads of eager home buyers.  But in today’s highly competitive marketplace, any perceived inefficiency in a floor plan can result in a house being passed by.  The current market environment is giving homebuilders the opportunity to create innovative and attractive floor plans on small lots in high density areas that were overlooked in previous market cycles.

Homebuilders looking to reach the ever-prized “qualified home buyer” need to focus on differentiating their new home communities more on the house itself and less on lot size.  Now, more than ever, they need to focus on the “livability” of the product from a floor plan standpoint.  In high density areas like the Bay Area, the way every square foot is used can mean the difference between big margins or big yawns.  All is not lost though; we can help point clients in the direction of new architectural innovations that allow formerly inefficient site and house plans to be reworked into projects that can meet the demands of today’s discriminating new home buyer.

Source: Steve Reilly, Marketing Consultant, (925) 368-3128

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Move-Ups Step Up in Placer County

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The Granite Bay / Loomis submarket is known primarily as an affluent re-sale, move-up market with great schools.  During last decade’s housing boom, the Sacramento region experienced unprecedented residential land entitlement.  However, the area has seen a lack of building activity in recent years, and now homebuilders are thinking of new ways to standout to attract buyers.  The Northeast Sacramento submarket has attracted several custom homebuilders looking to differentiate themselves from typical run-of-the-mill production homes, as standard production homes have seen heated competition (and downward price pressure) from the small number of qualified new home buyers looking for entry-level product.

Two builders in particular have found success finding move-up custom and semi-custom buyers in the unpredictable economic environment.  First, Kinetic Investments purchased Sierra De Montserrat in Loomis last year.  Initially, the private builder had no plans to begin construction right away, but it has already sold three of the 62 lots.  The home sites range from four to six acres apiece and are priced from the high $100,000 to $400,000’s.  At the market peak in 2006, “finished” lots in this submarket traded for anywhere from $600,000 to $900,000 per lot.  Now builders and investors can get their hands on the same lots for $100,000 to $300,000.

The Collection at Granite Bay is another community that has experienced notable success selling semi-custom lots.  Land Advisors Organization brokered the transaction in 2010 when The New Home Company purchased the community from Wells Fargo.  Of the 17 total lots, two semi-custom home sites have sold in the last couple weeks, and four more homes are currently under construction now. Pricing for The Collection at Granite Bay starts in the high $500,000’s.

Source: Ryan Long, Senior Marketing Consultant, (916) 784-3329