Only three months removed from its $4.3 million purchase of the remaining 340 lots at Spring Creek Ranch in Collierville, Boyle Investment Co. has awoken from a four-year dormancy in residential development and is primed to take advantage of a seemingly rejuvenated upper-end housing market.
Effectively signaling the first phase of construction with Boyle seated as owner and developer of Spring Creek Ranch, the company has closed on a $750,000 transaction that put 10 lots in the hands of five homebuilders. Among them is Ron Sklar, chief manager at Klazmer/Sklar Homes, which has already pre-sold one of its two lots.
“Right now, we see a lot of action in the $300,000-plus price range,” Sklar says. “That market seems to have really come back and we’re building in several places where that price range has been very good for us in recent weeks.”
Across developments including The Grove at Lakeland, Collierville’s Schilling Farms and Spring Creek Ranch, Sklar says his company has been doing “very nicely” at higher price points, even up to $500,000 homes at Wolf River Ranch, also in Collierville. He credits demographics as a primary driver of the upper-end housing market.
“It’s much more difficult to get a loan today than previously, and these are price points at which you just have to have better credit and more money,” he says. “These (buyers) are the people that can jump over the hurdles and through the fiery hoops the mortgage industry has put on people.”
Geography also plays a role, and Collierville has been a magnet for residential development the last year. Almost one in four new homes sold in Shelby County through 2012 was in Collierville, according to data from the Memphis Area Association of Realtors. A total of 143 new homes sold in Collierville last year, compared to 48 in 2011, and even though the median sales price slipped 16 percent over that time, sales of upper-end homes increased through 2012.
Data from Chandler Reports indicate a countywide 25 percent sales increase from 2011 to 2012 for homes priced at $300,000 or more.
Still, Gary Thompson, vice president at Boyle, prefers a more incremental approach to developing the remaining lots at Spring Creek Ranch.
“When the market has too much to choose from, buyers will hold out on making a decision,” Thompson says. “We want to keep a little bit of tension in there so we have competitively priced products that aren’t sitting there for a long time.”
In January, the average market time for a residential listing was about 97 days, according to MAAR’s Multiple Listing Service. A year ago, it was close to 110 days and in January 2011, it was more than 120 days.
But things have moved along considerably quicker at Spring Creek Ranch. Homebuilder John Duke listed a home on the afternoon of Feb. 15 and sold it — above its list price — at 10 a.m. the following day, illustrating another market driver: pent-up demand.
“I’d held that lot for four years and I saw they’d been selling out there, so I built the house and it sold right away,” Duke says.
Ryan Anderson, a partner in RKA Construction, one of the five homebuilders involved in Boyle’s recent transaction, expects to sign a contract soon for one home yet-to-be-built and has received a verbal commitment on its other lot at Spring Creek Ranch.
“Inventory is way down right now, which is always a good environment to work in, and there’s just not a lot of opportunity for builders to pick up lots,” he says.