Fall brings good signs as homes spring up
Large purchases in Longmont and Lafayette mark the start and expansion, respectively, of construction of two large subdivisions that, combined, will build more than 200 single-family detached homes.
The projects show that national homebuilders maintain their interest in the Boulder Valley, and that locally owned companies that survived the Great Recession have regained their footing.
In Longmont, Meritage Homes Inc. recently purchased 121 vacant lots. Meritage (NYSE: MTH), which is based in Scottsdale, Arizona, is the ninth-largest home builder in the United States.
Meritage paid $7.38 million for the lots, which are in the fourth filing of the Renaissance subdivision, a 38.3-acre area off Clover Basin Drive in southwest Longmont.
Meritage’s investment will grow as it finishes the lots and builds out the project, said Christina Presley, its Colorado division president.
The company is bullish on Colorado, especially the Boulder County market, Presley said. Meritage is wrapping up work on its Erie Commons project and wanted another project in the area, she said.
Meritage studied metrics such as inventory of existing homes up for resale, which Presley said is at a 10- to 12-year low. Home prices in Colorado mostly have held steady despite the recession.
“When a home goes on the market, it gets snapped up in no time and often for above asking price,” Presley said.
All of those factors are in place in the southeast corner of Longmont.
“Longmont, especially this part of Longmont, really has all of the metrics we look for that say it’s a great place to build,” Presley said.
Meritage has a fairly aggressive timeline. It wants to start work on model homes by the end of the year, and could even start selling this year, Presley said.
Completion of the Renaissance subdivision has been a long time coming but was stalled by the recession.
Boulder-based Chanin Development Inc. had plans to develop the subdivision as early as 2007. Representatives of Chanin could not be reached, but according to the company’s website it had planned to complete the project in 2009 and expected it to have a market value of $75 million.
In Lafayette, the long-planned Indian Peaks South project also is returning to life.
McStain Constructors LLC is building the project with the financial backing of private investors, including unidentified high-net-worth individuals from Boulder County, according to McStain chief executive David Ware.
Indian Peaks South will be a mixed-use development of 302 single-family detached homes and two commercial pads on more than 100 acres, Ware said. Indian Peaks South is at the southwest corner of Baseline Road and Colorado Highway 42.
The 47-home first phase of the project is well under way, Ware said, and the second phase of 94 homes is about to begin, Ware said.
The project will cost McStain about $8 million to complete, Ware said. On Aug. 30, Indian Peaks South 2 LLC, the investment company created for the project, bought the lots for Phase 2 for $2.5 million.
McStain had to take a different approach to finance Indian Peak South. Banks are not lending for acquisitions and developments of this scale, Ware said, so McStain relied on private investors.
Completion of Indian Peaks South will mark the culmination of about 20 years of work in Lafayette for McStain, Ware said. McStain also developed Indian Peaks, due north of Indian Peaks South.
Work on Indian Peaks South is a sign that a builder with deep roots in Boulder County is returning to life.
McStain, now based in Denver, was founded in 1966. McStain went through several tough years during the recession that culminated in layoffs, bankruptcy and reorganization in 2009.
“Everybody went through some kind of bankruptcy or downsizing, if you were able to hold on and not just close the doors and walk away,” Ware said.
The tough times make work at Indian Peaks South extra satisfying for McStain.
“I’m excited to bring it back to life and out of the recession,” Ware said.
Meritage and McStain are showing that the home-building industry is continuing its recovery, Home Builders Association of Metro Denver chief executive Jeff Whiton said.
“We went through a terrible recession, and what you’re seeing now is the natural recovery,” Whiton said of the increase in building in Boulder and Broomfield counties.
Whiton singled out McStain as an example of “a good comeback story” from a locally owned construction firm.
“The industry got hit really hard over the past five or six years,” Whiton said. “Eighty percent of the new-home builder industry in the Front Range was wiped out.”
Despite the growth, which started to gain momentum in 2011, wariness remains, Whiton said.
“It’s been a long time coming, but believe me, we’ve got a long way to go yet. It’s still fragile, and there are a lot of question marks about the economy. But we’re cautiously optimistic.”
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