Todd Amberry is Century Communities’ managing director of acquisitions in Denver. Century has been a builder/developer for 13 years. It had 420 net sales in 2012 and expects 525 this year. Besides its 12 communities in Colorado, Century also is looking for land in Texas, Las Vegas, California, and Arizona.
Amberry says that even during the recession Century was “very aggressive, but smart” about buying lots. Right now, Amberry sees available supply of [finished] lots, “but not in good locations.” Plus, lot prices in Denver now run $80,000 “at a minimum” while in 2011, the same lots were less than $50,000. Century prefers to have at least a three-year land-inventory supply. So in 2011, the firm “got out in front of everything” when it developed raw and entitled land. Amberry points to one project where the company developed 142 lots and now sells six houses per month. “You have to have the foresight for that.”
Matt Mungo is vice president with Mungo Cos. in Irmo, S.C. Mungo buys his company’s land in Columbia, S.C., and some of what it needs in Greenville and Charleston. “Our land-buying strategy is to replace everything we’re selling, which is a lot right now.” Mungo closes around 1,000 homes annually in seven markets in South Carolina, North Carolina, and Georgia. As of late February, it controlled 6,857 lots.
However, “there are no quality finished lots left, absolutely none,” Mungo laments. And what is available “has an egregious amount of hair on it.” Consequently, the period when builders could buy new lots in Mungo Cos.’ markets at below replacement costs are over. “It was nice for a while.”
So Mungo Cos. is back to developing real estate, either on its own or through third-party developers, which the builder prefers. With its 50-year-plus history, Mungo says it gets calls first from owners with land to sell.
Rex Gordon is vice president, corporate land for Kentucky-based The Drees Co. Gordon says there are plenty of opportunities to purchase or control “A”-location finished lots in most of the markets Drees builds in. “But in the really good markets, it’s getting tougher.” There are still distressed properties for the taking in Florida and available lots in Drees’ Midwestern markets. In Dallas, new developments are springing up “where there’s money to make these deals happen,” Gordon says, but prices for finished lots “are back to where they were at peak.”
Gordon isn’t concerned about competing with public companies for land because “we’re a move-up builder” whereas the publics often control land for entry-level home construction. Drees prefers to be one of several builders in larger developments, rather than taking on several hundred lots itself. “We want to do smart deals, and we’re not buying land to hold it,” he says.