Regis Homes is taking advantage of market conditions that have left California's Silicon Valley with a dearth of available new homes to buy.
This San Mateo, Calif.-based builder, an affiliate of Sares-Regis Group, sold 170 homes in 2009. It has more than 400 homes under construction, and its five communities have 211 of these left to sell, as of last Friday. Rob Parker, the company’s senior vice president of sales and marketing, expects these sales to be completed within the next 18 months.
Except for its latest community, Cedarbrook, with 27 detached single-family homes, Regis Homes has been selling attached product that ranges from the mid-$300s for a two-bedroom condo flat in Fremont, Calif.; to $900,000 for a four-bedroom townhouse in Palo Alto.
“We understand our buyers have been hit hard by market conditions over the past year,” says Parker. “We continue to focus on overall value because we know that’s what people want.”
Parker admits that his company was “nervous” and “uncertain” when it chose to build aggressively into the teeth of a recession. Regis Homes had two things going for it, though. One was the location of its communities in a part of the country where employment remains fairly steady, “so we’ve had a continuous pipeline of buyers” who have finally come off the fence because “they now realize that prices aren’t going to get any lower.”
The second factor was low interest rates, which helped close the gap, in potential buyers’ minds, between renting and owning. “So part of our success was skill, and part was luck," Parker says.
Over the past six months, Regis Homes has enjoyed a 5% appreciation in its home prices. But like many builders, its biggest challenge to close customers has been the appraisal process, which continues to use foreclosures as the measuring stick. Consequently, closing homes has sometimes meant that buyers need to come up with the difference in cash, or the builder needs to lower its price, “which we don’t want to do.” So Regis Homes is spending a lot more time these days working with lenders to make sure the appraised value of the home is genuinely recognized.
Most of Regis’ construction and sales activities for the foreseeable future will be filling in its existing communities. “We’re looking at some interesting projects in our own backyard,” says Parker. A year ago, Regis opened the second phase of its oldest neighborhood, called Park Lane West in Fremont, where it will have a total of 168 homes. The second phase of its Altaire community in Palo Alto—which since opening in January 2009 has sold nearly 70% of its available homes that are located within a European-style, walkable village—will be a reuse of an industrial site where Sun Microsystems had a facility. The company also has “future commitments” in Fremont.
At its Gables End neighborhood in Mountain View, Calif., a section that is being rezoned from commercial to residential will include for-sale and for-rent housing.
John Caulfield is senior editor for BUILDER magazine.