Builders are sniffing the air along the Front Range this new year and are making plans to ramp up their production. They like the inventory situation – huge absorption that has created an automatic demand for more housing. But more importantly, they like what buyers are telling them in their sales offices – how those people feel about their jobs and how soon they want to purchase.
“For us, 2012 was the first really good year since the meltdown,” said Gene Myers, CEO of New Town Builders; a super-energy-efficient
builder that’s among a minority of smaller companies to survive the down market. New Town sold 112 homes last year through its popular showcase in Stapleton and hopes to grow the number 25 percent this year.
Figuring in both how many they’ll add and how many will sell out, Scottsdale, Ariz.-based Meritage Homes figures to expand its presence along the Front Range by no fewer than eight communities. “Last year was our best year in Colorado,” said Colorado VP of Sales Cliff Stahl, tallying Meritage’s 291 closed sales, as he opens new neighborhoods in Arvada, Fort Collins and Castle Rock.
More important than the number of closings was the larger number of contracts Meritage wrote – 360 – a stat that includes recent sales that haven’t delivered yet. If the year finishes with contracts outnumbering closings, you can assume momentum is growing. “That’s great for any builder,” Stahl added. “We know what the first part of the year will look like.”
Both Meritage and New Town are seeing a new attitude among buyers: “People are telling us they have jobs,” Stahl noted. “Before, people were saying ‘when I do have a job.’ The quality of traffic is much better now.” More importantly, people seem more comfortable in their employment. “There’s more clarity and comfort; they might see some advancement in their position.” The situation is better still, he noted, in northern Colorado, where Meritage is opening.
Meanwhile, both builders sense that their emphasis on energy efficiency has become a kind of ace-in-the-hole that’s providing them with an advantage over the resale market.
“In the back of your mind there’s always this question, is energy performance more important than a granite countertop?” mused Myers, who has incorporated advanced energy features for two decades. Last year he opened a zero-energy model at Stapleton – a home that matches high efficiency to solar electric panels to yield no net energy use at all – then watched as eight recent buyers opted for the upgrade. “I have buyers that say that they wouldn’t have bought from us without it,” he recalled. “Buyers that care about it are seeking us out.”
“We’re very fortunate that we build an energy-efficient house,” added Meritage’s Stahl. “You have a product that clearly performs better than a resale house. That allows our buyers to buy a little more home, to save more to take the family out to dinner or to send a kid to college. We think that’s smart.”
Jack O’Connor, broker/owner of The Denver 100 Real Estate and a market analyst, says energy performance is an increasing advantage for builders as consumers become more conscious. The Colorado Real Estate commission, he notes, will now require a more elaborate disclosure of “green” energy features – something that few sellers of existing homes will be able to tout, compared to builders.
What will be tougher for builders this year is getting new lots to keep up with demand. “It’s the age-old cycle; will there be supply?” said New Town’s Myers. He’s focusing on around 150 lots, mostly infills, he hopes to bring on line in Wheat Ridge and Westminster, in addition to a new model complex that will open in Stapleton’s Northfield area this spring. “It’s challenging,” he added about finding lots. “There are no good-old-
fashioned lenders who are interested in land; but we’re having some success.”
Mark Samuelson writes on real estate and business; you can email him at mark@samuelsonassoc.com. You can see all of Mark Samuelson’s columns online at DenverPost.com/RealEstate.
