Sales of homes in TND remain strong

New Urban News selected 15 projects for its first annual survey of sales in traditional neighborhood developments (TND) Developers in TNDs report that sales in 1999 have risen slightly or stayed consistent compared to previous years. The 15 projects do not represent all new urbanist projects, but they were selected for their diversity (see table on page 5). They are located in many regions of the U.S. and Canada. Some have just a few dozen houses completed, while others have finished neighborhoods and commercial town centers. While many are greenfield projects, the survey also includes urban infill development. Prices for single homes range from $75,000 in Park DuValle in Louisville, Kentucky, to $585,000 in River Ranch, in Lafayette, Louisiana, and all the way to more than $2 million in Celebration. A lot can be purchased for as low as $6,000 in Park DuValle. In River Ranch alone, the lot prices range from $40,000 to $327,000. In the 12 months preceding November 1999, the selected TNDs sold a total of 1,460 homes. The sales leaders were the Florida TNDs Abacoa and Celebration with 270 and 237 homes sold respectively, and McKenzie Towne in Calgary, Alberta, with at total of 230. Lakelands in Gaithersburg, Maryland, sold a noteworthy 190 homes in its first year of sales. In a few projects sales have slowed because developers were unable to build inventory to keep up with demand. This was evident in Prospect, a TND in Longmont, Colorado, and in Northwest Landing in Dupont, Washington. Northwest Landings’ sales leveled off after several years of steady growth, but the project still sold an average of nine homes a month in 1999. In half of the projects, rental apartments are an important part of the housing mix, and these projects had approximately 2,500 units available for rental. All of these units were occupied in 1999; in Celebration people are on waiting list for the downtown apartments. The average monthly rental fee in all TNDs surveyed hovers around $1,000 dollars, but many projects offer a wide range of prices. Addison Circle in Addison, Texas, had the widest range of options available. There an apartment costs from $600 to $3,500 a month. Spec vs. custom TNDs that sell lots to both builders and individual buyers face the problem that lot owners who want to build a custom house often are in no hurry to begin construction. Not only do such delays create gaps in the urban fabric; they tie up lots that could otherwise be occupied by speculative houses and sold more rapidly. Robert Turner, the developer of Habersham in Beaufort County, South Carolina, has sold 35 lots to individuals in the past year, but only one to builders. “We’re getting the retirement market, and those people already have a house and can wait a few years before they move here,” Turner says. The area’s economy is small and focused on tourism, so Turner is working with the county to bring in small industry and diversify the economy, in the hope of creating a deeper market. Habersham has also run several national advertisements to attract the relocation market. In I’On, a TND in Mount Pleasant, South Carolina, Graham Development has been able to build neighborhoods at a faster pace, in part by requiring that prospective custom house residents begin construction within six months of closing the sale on the lot. The project currently has a balance of 60 percent custom homes and 40 percent spec homes, says I’On’s Chris Anderson. He adds that the local housing market is very strong, and builders have difficulty finding enough skilled labor and are unable to keep up with demand. “We’re selling spec homes when they are in the framing stage, and lots sell as soon as they are cleared.” In December 1999, I’On had just one spec home and 25 lots available for sale, cutting down on sales to people who move to the area in search of a home. Smaller product drives sales TNDs distinguish themselves from conventional developments by offering a wider range of housing types and lot sizes. Home prices often appreciate fast in popular projects. Last year’s study from George Washington Universi-ty, Valuing the New Urbanism, calculated that builders in selected TNDs were able to charge an average premium of 11 percent on their houses. This makes smaller and less expensive houses and townhouses an important asset for maintaining income diversity in a community. The new South Village in Celebration near Orlando, Florida, features bungalow homes of approximately 1,800 square feet with a price point beginning at $150,000. According to Marilyn Waters of the Celebration Company, these homes have proved the best sellers in South Village and have “allowed a whole new segment of folks to move in here.” Most of Celebration’s original residents were families with children, but the community now has more singles and empty nesters. Home prices in Celebration crest at over $2 million, and Walters says prices have appreciated 25 to 30 percent since sales began in January 1996. In the Vermillion (Huntersville, North Carolina), home prices range from $95,000 to $260,000, and developer Nate Bowman says hitting the lower end of the market has been key to the project’s success so far. “We have good-looking architecture and are now getting the critical mass that helps sell more homes,” Bowman says. He sold 142 lots to builders in 1999 and signed contracts for 83 townhouses in addition to the 42 already built. Other developers in the area have flirted with aspects of the New Urbanism, Bowman says, but their houses generally start at a higher price point. With its relatively low prices and mix of housing options, Vermillion has been able to remain competitive in the area. The less expensive starter home segment has also proved to be an important sales success in McKenzie Towne in Calgary, Alberta. These single family homes and townhouses sell for between $95,000 and $110,000 (US dollars), and along with the mid-market housing priced at about $150,000 they have made McKenzie Towne Carma Development’s second best selling community in Canada. The Alberta market was very soft until three years ago, says Dianne Dickson of Carma, but since 1997 McKenzie has seen consistent improvement in sales. While lower end housing is an important sales driver in many TNDs, New Urban News’ survey shows that other projects experience a more even distribution of sales. Charles Cash of the Louisville, Kentucky, Development Authority says all income levels have been buying homes or renting apartments in Park DuValle, a 100-acre redevelopment of a federal housing project. The 111 homes that have come under contract since sales started in January, 1999, sold for between $75,000 and $240,000. Virtually no new housing had been built in the area for 50 years, but “the market for the whole range of homes was much greater than anticipated,” Cash says. Orenco Station in Hillsboro, Oregon, stands out in the survey with its quite narrow range of home prices. The current base prices, before lot premiums and possible addition of granny flats, range from $208,900 to $238,500 for single family homes. The smallest floor plan measures 1,450 square feet and the largest 1,900 square feet. Rudy Kadlub, President of Costa Pacifica homes, the main builder in Orenco Station, says he had anticipated that the smaller plan would be the most popular, but he has been surprised to see all models sell very evenly. “I’m also pleased that we are selling so much attached product,” Kadlub says, referring to the 59 townhomes already completed and sold. “It’s clear that people are willing to make sacrifices to live in this kind of environment. If this was a standard development we would not be able to sell at this pace,” Kadlub says. According to the National Association of Homebuilders, the median sales price for new and old homes in the greater Portland area now stands at $160,000. “It really is the sense of community, and not the size or price of homes, that is driving the success,” Kadlub adds. “We have good land planning, parks, and a town center with down-home services.” Town center draw The effect of commercial centers on home sales is impossible to measure, but undoubtedly town centers make it possible for a TND to reach out into the greater community and draw in a much larger customer base. People who are not necessarily hunting for a new home may visit a town center to shop or see a movie and get a first hand view of how the community is different from its surroundings. Celebration’s downtown has been a shopping destination and tourist attraction since early in its development and has become an essential marketing tool. A developer of residential communities in the Sun Belt recently told the New York Times that his sales offices usually get 25 visitors a week. In Celebration, however, “it is not unusual to see 100 a day, 25 percent of them European sightseers,” he said. These many visitors may not want to buy, but they carry their impressions back home and spread the word about Celebration. According to Carma’s Dianne Dickson, McKenzie Towne has also drawn in many new people since a main street district and a large supermarket opened there last fall. Glen Trotta, Director of Sales at DiVosta Homes, sells houses in Abacoa, a TND with an emerging town center in Jupiter, Florida. “There are not a lot of examples of this kind of development out there,” Trotta says, “and people have to figure it out on their own. But once the community is there, once the town center comes together, it is much easier to sell.” Some commercial centers grow slowly but may still have some influence on sales. Says Paul Brunsell, a project manager in Middleton Hills near Madison Wisconsin, where the commercial element is limited to a convenience store, a hair salon and some offices: “At this time there is no real influence on sales by the commercial area, but buyers are definitely relying on the fact that it will be there.” In the meantime, Middleton Hills has won an important endorsement from the Madison Area Builders Association and become part of the annual Parade of Homes. This two-week event draws tens of thousands of interested citizens to the area’s first TND, Brunsell says.