Perry Cadman, COO of Denver’s New Town Builders, was doubtful when the developer of the upscale Tallyn’s Reach master plan came to the builder nearly two years ago looking to sell lots suitable for million-dollar homes.
“The market for homes over $700,000 had really just stopped,” remembers Cadman.
Still, Tallyn’s Reach, with its Aurora, Colo., location, high-end community center, walking trails, mountain views, ponderosa pines, lots as large as three-quarters of an acre, and excellent schools, was tempting.
So New Town polled Realtor friends, checked in with market researchers about the most current state of the local economy, and started crunching numbers.
The conclusion: If it could find a way to build and sell homes for less than $450,000, under the limit for conforming home loans in the area, New Town would be willing to buy into the community.
“We went back to the developer and worked out a deal” with low enough lot prices to make the numbers work, says Cadman. “The lots were fully developed and finished for a while. There just wasn’t the interest in the higher price points. They wanted to turn the asset.”
But New Town’s work was far from over. “We knew that we had to have a good competitive advantage, and the big lots were a piece of the equation” needed to be successful, Cadman says.
Another piece was a product that would appeal to the broadest group of buyers possible, increasing the odds that the homes would sell quicker. And New Town had to be able to produce them at a price low enough to stay under the loan limit.
So New Town started with a standard craftsman-style ranch plan, then trimmed between 200 and 300 square feet out of it. While the homes are still relatively large for today’s market, at between 2,625 to 3,258 square feet, they are considerably smaller than the 3,000- to 4,000-square-foot homes originally planned for the lots, Cadman says.
And more versatile. The single-story ranch can morph into a two-story home at a buyer’s desire. Buyers also have the options of finishing out a walk-out or regular basement for additional square footage and converting dens and other spaces into additional bedrooms for big families.
A master-down plan is offered to appeal to older buyers who might not want to negotiate stairs often and who prefer to house visiting children and grandchildren in separate quarters upstairs or in the basement.
“We tried to make sure we had broad appeal for every demographic,” says Cadman.
New Town started selling in Tallyn’s in June 2010 and had sold 14 homes by late July 2011, with four sold before the model homes opened in November.
New Town is out-selling the two other builders in Tallyn by more than two to one. While the two other builders together sold eight homes in the community from January through July, New Town sold nine.
Beyond the bigger lots, buyers are attracted to energy-efficient features including photovoltaic systems as a standard feature. New Town was already providing solar power systems standard at its single-family houses in Stapleton, a much more tightly packed Denver development.
“At Stapleton they just expected it,” says Cadman. “When we took [solar power] out to the suburbs it was a bigger hit because it really wasn’t expected” by buyers. New Town’s homes also have zoned HVAC systems, hot water recirculation pumps to save water, and log HERS ratings in the mid-50s.
Buyers are also spending extra on upgrades, such as finished basements, better cabinets, and granite countertops at the development.
“I’ve been pleasantly surprised,” says Cadman.
Learn more about markets featured in this article: Denver, CO.