WHEN ONTARIO, CALIF.–based Frontier Homes finalized its $29 million purchase of the real estate assets of bankrupt builder Turner-Dunn in February, it not only established its first beachhead in Arizona, but possibly set the stage for further growth in the Southwestern U.S.
Mike Dwight, Frontier's senior vice president, confirms that his company is looking in New Mexico and Texas for land opportunities similar to the 430 home sites in five subdivisions in Pinal County, Ariz., it picked up at auction. Turner-Dunn abandoned those sites—including a few nearly completed houses and 144 units in various stages of construction—after it filed for bankruptcy protection in August 2006.
It might seem odd that any builder would choose to enter a Phoenix market that crashed last year, but Dwight says the deal is less risky than coming into the market as a startup. Plus, Frontier's senior managers built homes in Arizona when they worked for Forecast Homes (now part of Hovnanian Enterprises), and Frontier's Southern California divisional president, Doug Stewart, has lived in Gilbert, Ariz., for two decades.
Frontier is estimating that it will take them about 18 months to complete this project. Its homes in Phoenix will range from 1,300 to 3,000-plus square feet within nine floor plans. With prices starting at around $170,000, Frontier is targeting entry-level and first-time move-up buyers. Dwight says that because Frontier acquired this land in bulk, it has enough margin leverage to sell homes at below-market-rate prices. (For example, a 2,097-square-foot home is priced at $218,000.)
Frontier has two sales offices in Casa Grande and Maricopa, and prospects have included a smattering of previous buyers whom Turner-Dunn stiffed. Frontier isn't asking those buyers to put down another deposit.
Learn more about markets featured in this article: Phoenix, AZ.