Upon visiting the Cameron Springs community in Cobb County, Georgia, in 2012, real-estate fund manager Drapac Capital Partners saw that the landscaping had become lifeless and that weeds had begun to grow through the fractured tennis courts. In the late 2000s, with barely a portion of the homes finished, construction workers had abandoned their jobs, leaving vacant lots strewn with discarded tools.
Drapac thought such vacant lots had potential. It was anticipated that home builders would eventually return to the neighbourhood, and they paid $375,000 to purchase the 101 remaining lots in the neighbourhood. It then spent around $550,000 refurbishing the pool and clubhouse and finishing half-built lots.
Interest in the property increased as buildable building lots became scarce in the country. Drapac sold the neighbourhood to national builder D.R. Horton Inc. for $6 million after receiving 12 offers for it last summer.
Sebastian Drapac, the chief operating officer of Drapac Capital Partners, an Australian company that has bought more than 25,000 lots in foreclosed complexes in the United States since 2011, said, “I think they’re all panicking.” “Wherever they can, they’re trying to get lot positions.”
Due to the previous decade’s housing market bubble and crisis, the United States had an abundance of empty lots and partially constructed developments that many believed would never be completed. However, since the housing crash a decade ago, stricter financing criteria have made it more difficult for smaller operators to turn property into buildable lots, which are an essential component of new house building. As a result, builders are competing for a limited supply of buildable lots.
Currently, developers and financiers are beginning to revive those partially constructed communities that were abandoned following the crash.
According to a National Association of house Builders poll conducted last year, over two-thirds of house builders reported a low or extremely low supply of available lots in their areas. This is the highest figure the association has recorded since it began tracking the problem in 1997.
Developers must clear and grade the site, obtain local planning authority clearance, and install necessary amenities, such as gas and water, before turning land into buildable lots.
According to statistics from housing research firm Metrostudy, the overall availability of undeveloped lots has dropped by more than 20% in more than 80 major U.S. regions since 2011. Over the previous five years, the inventory of vacant lots has decreased by more than 40% in locations like Charlotte, North Carolina, and Nashville, Tennessee.
According to census statistics analysed by NAHB, the shortages caused median single-family house lot prices to soar to a new high of $45,000 last year, exceeding the previous peak of $43,000 in 2006.
In an effort to revitalise underfunded homeowners’ associations, improve incomplete community centres, and draw in new customers, investors and developers have started putting walking paths, lakes, and bocce courts to their developments.
Sometimes the development’s name is changed to remove negative connotations.
The words “Brightwood – Established 2007” were substituted by Drapac Capital Partners in front of a failing suburban Atlanta neighbourhood. After cutting trees and allowing the neighborhood’s access to an adjacent pond, they changed the name to “Brightwood on the Lake, Est. 2016.”
Steve Brock just sold Lennar Corp. $19 million for the property for around 300 houses in the master-planned community of Stonoview, which is located south of Charleston, South Carolina. The project had been shelved during the economic crisis. Mr. Brock paid $7 million for three tracts around the site in 2013, and over the next three years, he developed several of the lots, installed a 10-slip boat dock, and created designs for walking paths and a lighthouse. On 71 more lots in the region, now valued at $9.4 million, Mr. Brock and another builder plan to construct houses, he said.
Mr. Brock, the founder and president of Brock Built, stated, “We could sell it to them for close to retail prices, and they have the runway of land and lots immediately.” He said that he could never spend as much as Lennar did on a project of that size and still make a profit since he was a smaller builder and developer with a greater cost of capital.
Fulton Homes is renovating parks and creating swimming pools in the Glennwilde project, which is located 35 miles south of Phoenix in Maricopa, Arizona. The project had been mostly neglected by developers for the past seven years.
Fulton’s vice president of operations, Dennis Webb, stated that because these transactions require modifications, pricing are often cheaper. Additionally, Mr. Webb stated, “We can get going pretty quickly” because these neighbourhoods have already been planned and authorised. “We can develop the plans without having to wait a year and a half.”
