Goat Meat For Sale: A lesson in creating a successful new home community

Thursday, August 13, 2009

GOAT MEAT FOR SALE: A lesson in creating a successful new home community
A few years ago I inspected a vacant tract of ground in a remote location in the western suburbs of Birmingham, Alabama. Although situated within the city limits of Hoover, an upscale suburb which is considered to contain one of the better school districts in the metropolitan area, this property is and would naturally be perceived as for all intents and purposes physically within Bessemer, a lower income and socio-economic city in the process of decline.The growth in Birmingham had historically followed four major traffic arteries to the south. This property, unfortunately, was not proximate to any of those routes and instead was accessed only from surface roads after what seemed to be a long and arduous journey, remote from other development and services. In fact, when I first went to visit the site I wondered how we would attract prospective purchasers, especially as the most visible landmark along the way and very near to the property was a hand painted sign nailed to a tree that read Goat Meat for Sale.

Now I have come across a number of signs in my life that were puzzling. Last week in a restaurant restroom I noticed a sign next to the soap dispenser that read for washing hands only. I am still uncertain what the management was hoping to avoid by posting that sign, perhaps someone deciding to shampoo their hair? But I had no doubt what the goat meat sign meant and what it suggested about the perception of the neighborhood in which the property was located.
The developers behind the community were two experienced and successful real estate development companies in the area who had commissioned a market study by a national research firm before entering into their joint venture. And prior to finalizing the community plan and just to be certain that they were on the right track, they commissioned a second study to be certain that market conditions had not changed and to consider necessary adjustments to the development strategy prior to starting. I had the pleasure of performing that second study and commented to my client that their action reminded me of the first rule I learned in this business, taught to me by a carpenter during my month-long field indoctrination into the homebuilding process measure twice, cut once.
My report recommendations contained relatively minor changes from the original concept adjusting density and pricing within the parcels, changing the sequence of the development, revising some of the housing product positioning to reduce internal competition, and reducing the size of the Village Center property which required a TND housing component. This last recommendation was due to the local markets less than overly enthusiastic response to the TND concept in several existing developments. These recommendations were all implemented as were my specific suggestions for the community positioning and sales and marketing implementation. While there certainly are a number of successful new home communities across the country that opened in 2005, I believe that Ross Bridge is arguably unique in that its success has continued even through the current economic and housing downturn.
The original absorption estimates for the community had forecast home sales averaging 150 annually. The results achieved have met or exceeded that goal even though the local housing market has seen substantial deterioration. In 2006, the first full year of sales, 194 homes were sold; in 2007, 204 homes were sold; in 2008, 177 homes were sold (and in that year the lower priced home segments within the community were already sold out) and it appears that for 2009 they will sell 130 homes.
On an absolute basis those numbers may seem respectable but from a market share standpoint, they are exceptional. The 2006 absorption equaled a 2.5% share of the total new home production for the metro area, an outstanding accomplishment for a single community. And as the overall market declined by 30% in 2007, an additional 37% in 2008 and a projected additional 60% for 2009, Ross Bridges share of market increased to 3.6% in 2007, 5.7% in 2008 and to an amazing 14.2% in 2009.


What has made Ross Bridge so successful and what lessons can be learned for future residential development?1. They selected a location where their markets wished to live. That may sound simple, almost an absolute, but it was a concept that was often forgotten in the recent boom years.2. They created a true community, not just a subdivision, wherein the individual villages are sized for a reasonable sellout and are separated from each other to preserve values and allow for changes if market conditions require.3. They provided amenities that were appropriate to and desired by the target markets yet did not burden the development or the purchasers with undue cost.4. They selected professional builders and carefully segmented the product and pricing of the homes so that three full pricing quintiles were covered, maximizing the market appeal, while minimizing direct competition within the community.5. They regularly update their market evaluation including analysis of each builders performance and positioning to determine opportunities for their builders to increase sales.6. They required centralized sales and marketing by the developer to insure a cohesive and professional presentation to the market and they provided what I believe is the best sales operation in the market under the direction of my personal choice for one of the best new home sales directors in the business.7. They promote and market the community professionally, recognizing early the paradigm shift to web-based advertising and they spent their advertising dollars intelligently and effectively.
I would recommend taking a look at the community, with a physical visit if possible but, if not, at least a visit on-line http://www.rossbridge.com/
Posted by DanielLevitan at 11:12 AM




Labels: new home marketing, new home sales, new homes, residential development

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The Saga of the Falling Interest Rate

Click here to see how Signature Homes helps Chris and Jessica purchase their dream home...

Ross Bridge Community in Hoover, Alabama Gets Its First Commercial Tenant

As published by The Birmingham News on February 25, 2009 by News staff writer Liz Ellaby:

Richelle and D. J. Davis say their decision to move south from Michigan to start their own businesses was a wise one.

The Trussville couple's new ice cream parlor and pastry shop, The Sweet Stop, is the first retailer open at Hoover's Ross Bridge mixed-use community, and traffic has been steady among moms and the after-school and weekend lunch and coffee crowd, they say.

The Davises are partners with D.J.'s sister, Staci Davis, and her husband, Nick Sims, who live in the Ross Bridge Village Center neighborhood.

"We'd always wanted to try and do a restaurant on our own," Richelle Davis said. "We had this idea and didn't feel it would be a successful venture in Michigan."

The couple moved from Michigan two years ago and opened their first business, Gatherings Cafe, in Trussville, 10 months ago.

The Sweet Stop provides a social connection for the Ross Bridge community, which now has more than 600 households. It also provides Blue Bell ice cream, banana splits, milkshakes, coffee, scones and muffins, candy, lunch items and box lunches to go. Salads, prepared by D. J. at Gatherings, are catered to the Ross Bridge business.

A grand opening is scheduled for Saturday.

"It's going very well," Richelle said. "We've been impressed. The kids in the area drive the business to us."

The shop is part of the Village Flats, a convenience center on Grand Avenue that includes 10 retail spaces in two buildings, each topped by a residential loft. Other businesses in line to open are the Ross Bridge Nail Spa, the Ross Bridge Family and Cosmetic Dentistry, and Drake Fitness, a gym and personal training service that will take several spaces.

All but two spaces are leased.

"From what I've heard, residents want somewhere else to go and something to eat beside going to the resort," said Miller Terry, an agent for The Shopping Center Group, which is handling the commercial leasing. Owner Signature Homes is handling loft sales.

"As soon as the building started going up, we got a lot of responses."

Ross Bridge, a joint venture of Daniel Corp. and U.S. Steel Corp., is a resort community off Alabama 150 surrounding the $70 million Renaissance Ross Bridge Golf Resort & Spa, which opened in 2005. As of last week, there were 616 occupied residences, about a third of the 1,800 planned, with 950 units expected to be filled by mid-summer.

The commercial segments of the subdivision, which also include an undeveloped 15 acres owned by another developer, were to be built according to demand.

Demand apparently grew along with construction delays at Village Flats. The development, scheduled to open last summer, was completed in late December.

"You can see how the neighborhood has been waiting for this by the amount of activity," said Jonathan Belcher, president of Signature Homes and a Ross Bridge resident. "People are coming here all the time. It's right by our offices, and we're always sneaking over to grab a milkshake."

The shop is open from 7 a.m. to 8 p.m. during the week and 9 a.m. to 8 p.m. on weekends.

Click here to read the article on al.com.

Tax Credit for First Time Purchasers

Whether you support President Obama's economic stimulus plan or not, if you are a first time homebuyer, there may be something in it for you!

Here are a few bullet points summarizing the new legislation:

• The tax credit is for first-time homebuyers only.
• This is a true credit, and does not have to be repaid to the government.
• The tax credit is equal to 10 percent of the home's purchase price up to a maximum of $8,000.
• The credit is available for homes purchased on or after January 1, 2009 and before December 1, 2009.
• Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full tax credit.

If you think you may qualify, click here to see frequently asked questions and answers about the homebuyer tax credit.

You may also find useful info on this link about other provisions in the stimulus plan that relate to the housing market.

Signature Homes Grew Market Share in '08

As posted by the Birmingham Business Journal on February 4, 2009 by staff writer Lauren B. Cooper:

Birmingham home builder Signature Homes said it saw growth last year, despite the down economy.

Signature said its market share grew by 78 percent in new homes sold between 2007 and 2008 in Birmingham, according to data compiled from the Birmingham Area Multiple Listing Service.

In Hoover, where the builder has developed several subdivisions, Signature said it had a 65 percent market share of new homes sold and sold 59 percent of all new homes priced between $180,000 and $400,000, said a news release.

Also in that price range, the company said it built in four of the top five residential new home communities last year – Ross Bridge Village Center, Edenton, Beaumont and Chapel Creek.