Success Stories: Compact Classic

Larry I. Smith, Inland Empire regional president for William Lyon Homes, says the Newport Beach, Calif.–based builder likes the idea of going against the flow. In fact, that's exactly where it wants to be.

“We would prefer, especially in a market that is a little difficult, to do something other people are not doing to avoid being another one of the pack,” Smith says. “We try to be a little contrarian.”

That perspective was central to a decision the builder made in the design of Serafina, a high-density townhome community in Mira Loma, Calif., which turned out to be the builder's best-selling project in the Inland Empire in 2006. The first four phases were immediate sell-outs.

ROOM TO STROLL: A carefully planned site allowed William Lyon Homes to achieve a density of 16 units per acre at Serafina, yet still provide its buyers with a sense of openness. Private decks and courtyards overlook pocket parks with benches and fountains and lush, landscaped paseos.

When William Lyon first acquired the 20-acre, Riverside County property in 2003, the new homes being built in the area were traditional, single-family houses on 5,000- to 7,000-square-foot lots, Smith says. There was no attached product at all in the area at the time, so a community with 16 units to the acre was definitely risky.

“There were reservations,” Smith says. “We wondered if this was too far ahead of the game.”

But the concerns were outweighed by the opportunity to take advantage of a prime location, close to the freeway for commuters working in nearby Orange and Los Angeles counties and directly across the street from new shopping. Plus, it was a chance to achieve a lower price point and tap the pent-up demand for more affordable housing. The price range at Serafina is $323,000 to $413,000, which is well below the normal price of a new home in the area, Smith says. “It's hard to find much for under $550,000,” he adds.

Kelly Rae, director of sales and marketing for William Lyon Homes' Inland Empire division, says that the affordability factor was a major element of Serafina's appeal—and a central element of the marketing. The community's brochure starts with the message, “Welcome to Serafina, where the joy of homeownership is well within your reach.”

From a marketing standpoint, Rae says, the timing of Serafina's opening and its price point worked together to drive traffic—and sales, Rae says. “It was a price-sensitive project at a time when single-family homes had blown affordability out of the water.” As an added benefit, Serafina's monthly HOA fee—among the lowest in the area—includes water, sewer, and trash pick-up.

Given the entry-level price point, Serafina offered its buyers some unexpected amenities. The community is gated and features a 13,000-square-foot recreation center with a pool, spa, cabana, outdoor fireplace, and barbecues.

Original plans for Serafina called for two products: two-story townhomes with three to four bedrooms and ranging from 1,799 to 2,078 square feet; and a smaller, two- and three-bedroom, three-story townhome ranging from 1,142 to 1,532 square feet. Initially, the builder intended to keep the two lines separate, locating them in different parts of the property and marketing them under different names, Smith says. After discussions with Riverside County planning staff, the builder opted for a plan that blends the two product lines side by side.

“As you go through the community, you'll have a two-story building on the right side and a three-story building on the left side,” Smith says. “It's constantly going up and down. If we hadn't done that, we would not have nearly as much character and interest as we do now.”

The site also features “little pockets of activity,” he says, including gazebos, a half basketball court, tot lots, and landscaped paseos.

Besides the key location and the price point, buyers have responded to the Tuscan-style architecture and the floor plans. Every unit has a side-by-side, two-car garage, instead of parking that requires putting one car in front of the other. All the plans feature a living space with a combined great room and kitchen area.

“It's a very open floor plan,” Smith notes. “There are big windows and a lot of light, big closets, and open features like lofts to make it a little airier.”

SPACE TO SPARE: All six floor plans at Serafina feature spacious master bedroom suites with walk-in closets.

The three-story plans each have a separate bedroom and bath on the first floor and have appealed to young professionals, says Erik Frechette, project manager. These customers often buy the units alone and rent out the second bedroom and bath to a friend to make it more affordable.

The two-story product line “lives a lot like a single-family detached house,” Frechette says. Two of the three plans have four bedrooms, which in retrospect might have been a mistake, he notes.

“Looking back, we probably missed the mark there,” he says. “We thought a larger bedroom count would be key.” Instead, the three-bedroom plan has been more popular because the bedrooms are larger. “While we believed the buyer would be a larger family, it's actually a younger family that has maybe one or two children.”

Other highlights of all the floor plans include fireplaces, workstations, media niches, lofts, and private outdoor space, either in first-floor porches or courtyards or upstairs decks.

Serafina's location close to a high-traffic area made it easy to market the project, adds Frechette.

“As soon as the signs went up, we had half a dozen to a dozen people coming through wanting to buy one right then, even though nothing was open,” Frechette says. “We continually had to tell people to come back.”

Communication was on-going with prospective buyers who signed up for the interest list on Serafina's Web site. Those who registered on the list received regular updates on the project's progress, including the posting of floor plans and site renderings details on pre-qualification, and announcements about the opening of models. As a result, about 1,500 people showed up at the grand opening—150 of those were in line at 9 a.m., an hour before the event started.

“We weren't giving away a lot of free food, we didn't buy anybody with a Ferris wheel, and there were no carnival games,” Smith says. “The key was keeping people informed and giving them good feedback on a regular basis.”

The following week, Serafina opened for sale. A total of 400 people pre-qualified for the first-phase release of 30 homes. The first 100 were invited to select a home.

LIGHT AND AIRY: Main floors of all the Serafina plans combine great rooms with kitchens and dining areas to provide maximum flexibility. Large windows add to the sense of openness.

Since Serafina opened, it has drawn an average of 250 to 300 visitors per week to the sales center. It sold 119 units in the first six months and then settled into a rhythm of about eight sales per month since then. As the market has softened, Rae's team has reached out to the real estate brokerage community, offering a 3 percent commission.

While many builders in the market are slashing prices and piling on incentives to move standing inventory, Serafina's incentives have been limited to assistance with closing costs and a small buy down in the mortgage interest rate, Rae says. “That's where our buyers really need the help,” she says. “We're not having to cut prices. We've actually increased the price a little bit.”

With the success of the project—it's not only sold well, but also has won several local awards—Serafina has gotten “a lot of attention,” Smith says. William Lyon sees an opportunity to build “one or the other [product line] or both in the future and probably will. Some city officials [from other municipalities] are saying they'd like to see this in their communities as well.”