Languishing lots showing signs of life
October 1, 2012By J. Elias O'Neal
Its location is ideal to all walks of life. Good schools, desirable zip code, access to shopping and minutes from the beach, the Andrew’s Reach subdivision near Masonboro Sound should have experienced gangbuster growth during the boom years.
But when the housing meltdown on 2008 gripped the area, many of its lots just sat.
And sat, and sat, and sat.
“It was pretty rough,” Richard Donaldson, president and owner of Wilmington-based Charter Building Group, said of the subdivision’s prior condition. “Many of the lots were overgrown, the entryway needed to be spruced up and a lot of the neighbors were worried about the values of their own property.”
Donaldson knew it was risk, but it didn’t stop him and business partner Samm Jernigan of Wilmington-based Jernigan Homes from purchasing the remaining lots in the defunct subdivision from Winston-Salem-based BB&T bank in July for an undisclosed amount.
“The area has potential,” Donaldson said recently while walking through the community.
“We have no debt on the property, and that is going to allow us the opportunity to move forward on some projects in the community that will hopefully move many of these empty lots to sell.”
And he’s not alone.
Other builders and firms are beginning to purchase lots in formerly distressed developments with increasing fervor across the Wilmington area as demand for new single-family homes increases.
“[The lots] must be priced to move,” said Charles C. Poindexter, a developer partner and broker with Wilmington-based LMC Group, a firm that specializes in distressed commercial and residential properties across the region. “You can’t sell $340,000 lots. It won’t work, and those days are over for the foreseeable future.”
A number of distressed, bank-owned properties are slashing original lot costs by as much as 40 percent across the market, Poindexter said.
But it’s the low lot prices that continue to entice builders to many distressed properties across the area and could lead to new housing development at more affordable pricing.
That’s good news, according to regional housing experts who estimate that within eight months 35-40 percent of the Wilmington market might have no new-construction homes available to purchase.
Roy H. Holdford III, a developer partner and broker with LMC Group, said it’s the low lot pricing moving builders to buy in distressed areas.
He added that builders are also growing increasing cognizant of raw land once hot during the housing boom but went ice cold during the bust.
Two North Carolina builders – Fayetteville-based Caviness & Cates Communities and Raleigh-based American Homesmith – recently snatched up all 58 lots in Poplar Branch, a new subdivision set to rise on nearly 24 acres on Mill Creek Road in Surf City.
After the project sat abandoned for years, construction on the single-family development – where future home prices are priced between $129,000 and $179,000 – is slated to begin in the coming weeks.
Holdford added the firm was close to closing on additional acreage in the Surf City area that could add 175-233 lots for new-construction homes in the area.
“We’re working on two other deals in that area,” Holdford said. “But I can’t discuss them at this moment.”
The group is also in serious talks with investors from Charleston, S.C. and Raleigh to purchase The Village at Hawkeswater – a First Bank-owned property near Leland that boasts more than 250 construction ready housing sites.
Tampa-based Landeavor LLC and Chicago-based Walton Street Capital LLC recently acquired Anchors Bend, located along Middle Sound Loop Road.
Adam Lorry, Landeavor managing principal, said the 129-acre development was one of three distressed properties the firm purchased from Wells Fargo for an undisclosed amount across North and South Carolina.
“We feel the housing market as a whole has hit bottom,” Lorry said. Wilmington is one of many mature costal markets, and we feel the Carolinas will recover because of retirees and baby boomers buying second homes.”
Donaldson remained cautiously optimistic about the area’s housing market, including his recently acquired subdivision where he and Jernigan plan to roll out new homes between $370,00 and $500,000.
“This is a cyclical business, and there’s no clear evidence of a recovery yet,” he said. “But we feel confident in the area and our plan to sell and build homes here.” build homes here.”