Local builders fill in lots with entry-level houses
Residential homebuilding founds its legs in the Reno-Sparks area in 2013, but it’s taken local homebuilders a bit longer to re-enter the market.
Local builders that focus on price points in the low $200,000s and down plan to erect more homes this year than in the past five years combined. Those builders, who typically focus development efforts north of town in North Valleys, Stead and Cold Springs, expect 2014 to be a very busy year — but development of homes in that price range soon could end, one developer says.
Lifestyle Homes has built more than 3,000 homes in the area, including more than 1,500 in Highlands Ranch in the back of Sun Valley. Lifestyle Homes President Peter Lissner says he plans to erect between 50 and 70 homes at Woodland Village in Cold Springs after erecting just four homes last year. Lifestyle Homes curtailed development as the market cratered in 2008 and held onto large land positions in Cold Springs and Red Rock. Lifestyle Homes erected about 200 homes per year before the recession.
Fred Altmann, owner of Better Green Building Company, is developing The Meadows in North Valley/Panther Valley, with prices ranging from $160,000 to $200,000. The one- and two-story floor plans range in size from 1,460 to 1,740 square feet. Altmann is on the last 15 homes of the 45-unit development. Five homes currently are under construction and are all sold.
Local developers have enjoyed success building north of Reno because of the lack of competition and relatively low cost of land, Lissner says. Lissner’s father started the company in 1989 with a strategy of proving lower-cost homes for first-time buyers.
“That was our motto: Buy a big piece of land where you could sell a house for less money,” he says. “That was our niche, and we just stuck with it. We could afford to take less profit than the national builders because we paid less for the land.”
It’s a strategy that’s paid off for Lifestyle Homes — the company has built more than 2,000 homes in Woodland Village. Its next play is to develop new subdivisions off Red Rock Road. Lifestyle Homes holds enough land to build about 9,000 additional homes, Lissner says.
In addition to benefitting from lower land costs, developers who focus on Sun Valley, North Valleys, Stead and Cold Springs don’t face competition from national builders with infinitely deeper pockets and marketing budgets, Lissner says.
Lissner says it’s taken a lot longer for small local developers to recover from the recession because many of the first people to lose their homes to foreclosure at the onset of the housing downturn lived in communities north of town. But by keeping price points under $200,000, local developers hope to offer that same group a chance to re-enter home ownership as they re-qualify for mortgages.
Prices at Woodland Village range from $185,000 for a 1,428-square-foot home to $225,000 for a 2,300-square-foot model. Prices at The Meadows in North Valleys range from $160,000 for a 1,460-square-foot model to $200,000 for a 1,740-square foot home.
Better Green Building Company also has erected several hundred homes behind North Valleys High School, as well hundreds of homes in the Kiley Ranch area. Altmann says it’s going to get much harder for local developers to continue offering homes under $200,000 once the region’s inventory of finished lots is built out.
“Most of us are working on property that had been developed four years ago,” Altmann says. “We did bunch of these lots way, way back, and we lost a lot of property. Some stuff we were able to salvage, and we are putting in homes at much lower prices. Now, when we go out and develop a piece of property, it’s going to be at least $40,000 to $50,000 (per lot), and that is basis of where we are starting. It’s going to be tough to get that house sold for under $200,000.”
By way of comparison, land Better Green Building Company purchased in Panther Valley for The Meadows ran about $15,000 per lot, Altmann says. Today, Altmann adds, that same ground would sell for a 167 to 233 percent premium.
“You have to travel quite a bit up the highway (395) to get land values down pretty cheap,” he says.
And with land values in the greater Reno area on the rise, Altmann says it’s only a matter of time before homebuilding again returns to town in Lyon County in full force. Fernley will be the next logical place for entry-level and lower-cost homes.
“There’s a balancing point whereby most of the people seeking to buy houses cannot qualify for that price range of $250,000 to $275,000,” Altmann says. “You are really limited on who shows up to look at it.”
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