Nagging reminders of Atlanta’s real estate recession can be found across the metro area. Those unpaved streets, lined with curb cuts and lots with white pipes protruding out of the ground, were meant to be part of a new neighborhood. Some developments got a bit farther, with a few homes standing guard over plots where other houses, tennis courts or playgrounds remain unbuilt.
But real estate experts say the situation is slowly reversing as builders move into partially- or barely-finished developments to complete them. The decision to take on a build-out hinges on several factors, starting with land costs.
“Builders who were financially challenged when the market slowed created lots of opportunity,” said Tom Sharp, president of the Alpharetta-based Sharp Residential. “The need for new housing diminished, and a lot of land was foreclosed, so we were able to purchase lots from lending institutions for significantly less.”
The restructured pricing of lots not only made them attractive to builders; they also provided an unusual opportunity to build in areas that were once too pricey to be practical. High-ticket areas such as Alpharetta, Roswell, Milton and East Cobb became more affordable for builders to enter if they want to finish out a partially-started project.
“We hadn’t built in some of those areas for 15 years because prices had gotten so high,” said Sharp. “Even though there’s a finite number of them, we’re paying well below replacement costs for them.”
Sharp has build-outs at Ivey Mills in Roswell and Vickery Crest and Milton Place, both in Milton. The area was attractive for its good schools, employment centers and transportation options, as well as for the chance to create an unusual opportunity for buyers.
“That northern arc continues to be a place people want to live,” said Sharp. “The lots there were a little bit larger, but we could build homes for sometimes less than half of what homes were slated to sell for. That made a compelling buy for our customers.”
At the Highlands in Milton, where houses start in the high $400,000s, Sharp was the only builder for 65 undeveloped lots, which gave the company the chance to put its own stamp on the project. But in many cases, existing homes are already on site. For Marietta-based Traton Homes, whose built-outs include Wakefield Estates in Smyrna, Scott Farm in west Cobb and Leisure Ridge in Dunwoody, that means getting settled homeowners involved in the build-out process.
“We always make it a practice to meet with the homeowners already there,” said Traton’s COO Eric Price. “You want them to be as happy as they can with the situation. In almost every case, it’s worked out for them: They got their neighborhood done, maybe not at the same price they paid years ago, but finishing the neighborhood is a big plus for everybody.”
Barbara Glore, sales manager for Brock Built, said her company takes the same collaborative approach when it comes to build-outs. At Idlewilde in east Cobb, that meant a good deal of communication with homeowners who had paid more than $1 million before the recession.
“At first they were upset and wanted million-dollar homes built,” said Glore. “We realize they bought their homes when houses were more expensive and the market better. Now, we’re building less expensive homes, from the $500,000s, but we’ve never cut quality. We have three-sides brick and three-car garages, and even let the homeowners approve the plans and colors. Once they got involved, they realized we weren’t going to destroy what they had already purchased.”
Brock has also had community input on projects at the Enclave at Laura Creek in northwest Cobb, where 20 Craftsman-style homes were already in place.
“We’ve designed our color schemes to blend in,” said Glore. “Our styles are not quite as large, but when we’re finished, it will be difficult to tell where we started. And we have homeowners thanking us for coming in.”
Though the prices of build-out homes may be, in some cases, significantly lower than what the first home buyers paid, there are plenty of positives to having a someone take on the job of finishing the community. Builders have paved streets, re-done ponds, put up entrance gates, cleaned up vacant lots and installed amenities such as tennis courts and swimming pools. Along with new neighbors, they’ve given homeowners associations a new lifeline.
“Most of the associations we’ve worked with had no money or funding,” said Sharp. “They couldn’t maintain the property’s entrance, and nothing was being done on the vacant lots. We put a lot of capital into the association to get things done.”
Build-outs also present a plus for buyers who can take advantage of lower housing costs in premier locations.
“They’ll get a good price in an area where new developments are coming on board with lots selling for a lot more,” said Warren Jolly, president of the Providence Group of Georgia that has done build-outs at Crabapple Crossroads and Vinings Manor. “Zoning in a lot of these areas hasn’t gotten any easier, either, and that will add to the jump in prices.”
Builders who can snag less-expensive lots can pass some of the savings onto buyers, said Glore.
“If we pay $50,000 instead of $90,000 for a lot, we have a bit of an edge to build a little bit better product,” she said. “And the neighborhood gets finished, which is a good thing for the homeowners, the buyers and builders trying to get through this crunch. I personally hate seeing those white pipes sticking out of the ground - they make the lots look like graveyards. A built-out can be a rebirth.”
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