WORLD PROPERTY CHANNEL ®

(ORLANDO, FL) -- Do the housing numbers lie in metro Orlando, one of the worst  foreclosure-laden and mortgage-stricken markets in the U.S.?

Several home builders aren't paying attention to the gloomy statistics. Instead, they are scouring the boonies to buy low-priced land on which to build smaller homes at greatly reduced prices, according to a recent Wall Street Journal overview.

A more recent Real Estate Channel assessment found some lots in previously prime developments in Orange, Lake, Seminole and Volusia counties being slashed by over 100 percent.

Those sharply reduced land prices back up Charles Wayne Consulting, Inc.'s recent construction report. The Orlando-based research company, reports a 70% year-over-year increase in construction starts for single-family homes in the four counties that make up the Orlando metro area in the first quarter of 2010.

Home builders have been able to slash prices on new homes, partly because land is still cheap -- some say as much as 40 percent to 80 percent off boom-era lot prices, builders tell the WSJ.

Take Bella Collina, for example, the exclusive ultra-luxury community that started development overlooking Lake Apopka in Monteverde, FL just before the housing market collapsed. Montverde, in Lake County, is about 32 miles northwest of Orlando.

Roger Soderstrom

Part of the reason, brokers at Stirling Sotheby's International Realty, tell Real Estate Channel, is fire-sale pricing.

Golf course home sites that were priced from $490,000 to $935,000 at the height of the real estate boom are now selling for under $50,000.

Two months ago, Stirling Sotheby's announced an international marketing campaign to spur sales in the luxury neighborhood.

Roger Soderstrom, founder and owner at Stirling Sotheby's International Realty in Orlando, said through May of this year two homes have sold at Bella Collina and six sales are currently pending.  Twelve homes are listed for sale at Bella Collina with the average list price of $3.3 million.

Dan Natoli

"Home sites at Bella Collina are a bargain right now," says Stirling broker Dan Natoli. "Golfside home sites on the market right now are priced from $2,900 to $80,000.  "They were originally priced from $490,000 to $935,000."

Homes at Bella Collina range in price from $900,000 to $7.9 million. However, Natoli foresees new homes priced in the $400,000 to 500,000 range in some neighborhoods in the coming year.  "Those prices will be driven by very affordable lot pries and new consumer buying trends," he says.

Buyer interest is growing daily, according to the Stirling team comprised of Dan Natoli, Carolyn Burgiel and Darren Iozia. "...The strongest we have seen in three years," Burgiel says.

Carolyn Burgiel

For example, Taylor Morrison Inc. of Scottsdale, AZ has purchased 142 lots in the past eight months, its first acquisitions in the Orlando market since 2007. In May, the company closed on 19 lots at Island Club, a planned lakefront development in south Orlando.

Taylor Morrison division president Tim Stapleton told the WSJ the homes at Island Club will range from 2,300 to 3,200 square feet and probably sell for about $400,000 each. In 2007, they would have been listed for $700,000 to $1 million.

Darren Iozia

Last year, Taylor Morrison sold 62 townhomes in Terracina, one of its new developments of State Road 46 near Mount Dora, FL in Lake County, about 28 miles northwest of Orlando. The homes range from $160,000 to $230,000. About 116 more townhomes are set to begin construction soon.

Centerline Homes, an independent Florida builder, has also been on a buying spree. In November, the company bought 499 lots in three Orlando developments, and has begun building at all three locations, according to the WSJ.

Prices for 50- and 75-foot wide lots, like the ones at Turtle Creek, a development in southeast Orlando that is being constructed by multiple builders, are in the $22,000 to $24,000 range, roughly 40% lower than boom-era prices.

Tim Stapleton

Because land is so cheap, builders are able to turn a tidy profit selling small homes, about 1,800 square feet, built at a cost of $150,000, and sold in the normal retail price range of $160,000 to $170,000, Steve Fusilier, an Orlando Realtor who sells homes in new developments and has a close relationship with many of the builders here, told the WSJ.

"I remember 12 years ago, going to a builders' meeting where they had glasses of champagne because they'd sold five houses in a month and they made $10,000 in bottom line profit on each one," Fusilier says.  "Then in 2003 to 2005, suddenly they were making $100,000 per home."

Officials from Meritage Homes Corp., a top-10 public builder, has 13 actively selling communities in the metro Orlando market, and with 77 sales in the first quarter (an 18% increase from a year earlier), the builder's Orlando division posted its first quarterly profit in three years, the WSJ reported.

Turtle Creek entrance, Orlando

"If you're looking at it from a 40,000-foot view, you'd sort of question what we're doing, but if you look at it the way we have, it makes sense to try and build more homes," Richard Harvey, Meritage's regional president for Florida and Texas. Meritage, told the WSJ.

Harvey said his company's strategy is similar for Denver, Las Vegas, Arizona and parts of California: to buy land at rock-bottom prices and begin building.

The company has acquired nearly 700 lots in the past 15 months, and says that job numbers in the area are encouraging for a market recovery.

Medical City, a 600-acre biotech park and hospital complex near Orlando's international airport being developed by the Tavistock Group, is expected to bring more than 7,000 jobs to Orlando in the next few years.

Nine different builders, including Hovnanian Enterprises Inc., Beazer Homes USA Inc. and D.R. Horton, have opened new-home communities.

Builders told the WSJ home buyers in Orlando aren't likely to be affected much by the massive BP company oil spill in the Gulf of Mexico, about 350 miles away.

However, the spill is already threatening to devastate the tourism and fishing industries in North Florida, Alabama, Mississippi and Louisiana.  The spill is also putting downward pressure on property values for many Floridians who live and do business near the water, the WSJ reported.

 

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