April 16, 2012 | last updated June 4, 2012 12:03 pm
FOCUS ON RESIDENTIAL REAL ESTATE

Wary home builders, brokers see market window opening

PHOTOS/PABLO ROBLES
PHOTOS/PABLO ROBLES
Glastonbury home builder Mark Stidsen, like other area builders and Realtors, are feeling more confident about the direction the central Connecticut housing market is taking. So much so that Stidsen’s Landsen Construction is erecting its first “spec’’ new home in recent years.

Many central Connecticut builders like Mark Stidsen are confident enough about what they see in today's housing market to try something they've done little of in half a decade — erect a house without a firm buyer.

"We see things changing,'' said Stidsen, whose Landsen Construction Corp. of Glastonbury is building a 2,500-square-foot, $455,000 "spec'' dwelling near the center of town. "We've seen an uptick and we're jumping in.''

Other builders and real estate brokers are equally optimistic — despite nagging concerns that the bottom could suddenly fall out of Connecticut's nascent jobs recovery and the ongoing paucity of builder and buyer credit — that the state's worst home sales and construction drought in nearly two decades is finally ending.

So far, the early sales traffic bears them out. Closings of existing single-family houses rose 10.5 percent in an unseasonably warm February — typically the peak of slow winter sales, according to the Greater Hartford Association of Realtors (GHAR).

Better still, properties under contract but not yet closed — a harbinger of actual sales as well as pent-up demand — rose nearly 50 percent in February from a year earlier.

January pending sales also were higher — despite a 4 percent drop in closings — making it the best two-month string of pending sales in recent years, the GHAR says.

"I think the buyers are tired of waiting,'' said Carol Presutti, of Prudential Connecticut Realty. The Bristol Realtor is GHAR's board chair.

Churning the market, Presutti said, are first-time and move-up buyers, along with investors, or "flippers,'' out for a quick financial score by buying, fixing and reselling foreclosures and other distressed properties.

That's just the kind of activity that Plainville builder John Carrier knows could be good for his business.

His family's Carrier Home Builders Inc. has about a dozen spec houses sprouting in nine subdivisions. That's double the number in 2011, a year Carrier describes as the worst for his company since the Great Recession began in late 2007.

"This year, it's been a little bit better,'' he said. "We need another month to tell.''

Carrier recalled that this time last year his lots were still buried under last winter's record snowfall, which slowed construction and buyer traffic.

Last year, Carrier Home Builders built and sold 35 houses vs. 63 in 2010. This year, the company is budgeting to sell 45 to 50 houses, Carrier said.

Moreover, Carrier says more than half the builders he knows are busy putting up spec dwellings this season, equally confident they will find buyers.

But as Carrier and other experienced builders know, that's far from a sure bet. For one thing, it's easier to sell a house that's already built than one that exists only on paper.

The overhang of unsold houses, observers say, is one reason that only 2,800 new-housing permits were issued in Connecticut in 2011, well below the peak of 11,000 to 12,000 permits in 2005 and 2006. Normal is 9,000 permits annually, says Eric Person, executive officer of the Home Builders Association of Hartford County Inc.

To minimize their downsides, builders are adjusting to reality. For example, no more sprawling million-dollar "McMansions.'' Supplanting them are units roughly 2,500 square feet priced in the $400,000 to $500,000 range, yet crammed with such appointments as high ceilings, granite countertops and unfinished upper-floor or basement spaces to accommodate a home-office or an extra live-in.

"A little smaller house, but more luxury,'' Carrier said.

Builder Stidsen is applying a similar formula. Before the housing market tanked five years ago, his Landsen Construction put up mostly suburban units sized about 3,200 square feet and priced in the $600s.

The location of his Glastonbury spec home, Stidsen said, is a nod to consumer demands from rising gas prices for housing conveniently located near the center of town. It also features an unfinished, 400-square-foot second-story room that could eventually serve as a bedroom, and basement space plumbed and wired for a home-office or more living space.

Stidsen also is financing the build out of his pocket to avoid the interest burden of borrowing from a lender for such projects.

Landsen built its last house in 2006 and since then has kept its small, four-person team of workers busy with home remodeling/renovation projects, Stidsen said.

However, at least three prospective homebuyers have approached him since Christmas about building for them. His worst fear about the current market, he says, is jobs — or the loss of them — and their negative impact.

"People don't have jobs,'' he said, "they aren't going to spend money.''

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