Since the recession, home prices have more than bounced back in many markets across the country. In the face of rising prices for single-family homes, builders must get creative to keep homeownership within reach for first-time buyers.
Florida builder 13th Floor Homes is bucking the trend toward more-expensive homes by building homes in the $200,000-$300,000 range for young professionals, families, and first-time home buyers. Here, BUILDER talks with 13th Floor Homes Division President Mike Nunziata, about how the company controls costs to keep prices low.
What types of homes do you build? What is your target market?
13th Floor Homes builds strategically-located single family homes and townhomes for value conscious buyers who are looking for all the features of a new construction home (open floor plans, modern finishes, turnkey design) at a price point that they can actually afford.
Our offerings tend to resonate with younger buyers such as millennials and first-time homeowners, but our residents span across all age groups and buyer segments. We are seeing more and more homeowners forgoing the isolated, gated communities typically associated with Florida to live in central areas that are closer to where they work and play.
How do you keep costs down enough to be able to offer homes at these price points?
One of the largest ways that we control cost is through our land cost and acquisition basis. We seek out land and find opportunity in places that other developers may have overlooked, which is where 13th Floor’s namesake comes from. We also make a point to think creatively when it comes to repositioning or re-using sites that were previously underutilized. Given that infill sites like these are generally located in more mature locations, our communities end up having less of a commodity feel to them than the traditional suburbs.
With infill sites, we end up with differentiated offerings that have limited competition. Given that sites like these are more challenging to uncover and entitle, we’re generally able to acquire land at attractive prices and ultimately pass those savings on to our home buyers.
What other ways do you cut costs?
An additional savings tactic we utilize is to limit options for unnecessary upgrades that do not have a large impact on residents’ day-to-day lives. While some builders have hundreds of options for cabinetry, flooring and fixtures, which can be combined in thousands of ways, 13th Floor has created packages that appeal to all homebuyers, but at the same time simplifies the selection process and the time and money spent on those options. These types of extensive features will slow down the entire build and sales process, which can seriously impact a developer’s margins.
We also have longstanding relationships with quality subcontractors that we leverage in order to get the fairest pricing possible. By only working with contractors that have an established, successful track record we ensure that our projects will be done right the first time. We have found our costs to be competitive with many large-scale developers and credit that to being a good partner to contractors that we trust.
How have consumers responded?
We have seen a tremendous consumer response to our communities. Central Parc, our 253-single family home community in Tamarac, Florida; completely sold out a little over year after sales launch. To meet the demand created by Central Parc, we broke ground on an adjacent 239-home project, Manor Parc in March of this year. Sales at Manor Parc are already ahead of schedule and we expect this community to mimic Central Parc’s sell-out. Our success speaks volumes for the pent up demand that exists for this demographic.
What we find consumers to appreciate the most is the value-proposition our communities offer; quality homes in a great location and at an unbeatable price. We also offer packages to our home owners with top quality-product, such as granite and wood cabinetry, included. The fact that we do not nickel and dime our residents really resonates with potential buyers.