Homebuilder, buyers benefit from lower land prices
Creekside at Inverness Ridge is being built by Meritus Homes and its president, Brian Brunhofer.
Bill Zars | Staff Photographer
Brian and Karen Brunhofer and their Deerfield-based Meritus Homes, founded in mid-2010, offers prospective buyers the benefits of experience and timing.
Both spent 12 years working for Pulte-Del Webb, learning how to build homes the right way while also acquiring knowledge on how to sustain a business, even in difficult times. With that wealth of experience comes the fact that their company was founded after the downturn. It is not encumbered by land purchased five years ago at "bubble" prices.
In addition, Meritus Homes has been able to buy partially-completed communities that other builders lost in the crash. That, too, offers savings to their buyers.
"We have been buying land in the right locations — places with strong schools and within transportation corridors — at today's prices and that has given us credibility with lenders and put us in a strong financial position," Brian, Meritus' president, said.
"It is easy to sell the last few lots in an already-landscaped and developed community because buyers have the security of knowing how everything will look and that it is almost complete," he added.
So, unlike many of its competitors, Meritus has been able to secure financing to build both model homes and immediate delivery homes, which has given the company a leg up on the competition.
"A lot of builders are still feeling the pain of the downturn so they can't provide their own land purchase and construction financing. Instead, they are required to have a buyer in tow when they go to the lenders," Brunhofer said. "There has even been a bit of a trend developing with more and more homeowners buying their own land, securing their own construction financing and then choosing their builder."
In some cases, Meritus is the one selling those lots to individuals and, in some cases, other builders. Its strong financial position has allowed Meritus to buy partially-completed communities, particularly in Lake County, and then sell individual lots to homeowners and other builders, Brunhofer said.
Meritus entered the marketplace when the Brunhofers purchased the last 27 lots in Creekside at Inverness Ridge, followed shortly thereafter by the last 22 lots in Ravenna of Long Grove. In 2011, it closed on five homes. This year the company expects to close on 15 houses and in 2013 Brunhofer projects it will close on 30 homes, an enviable growth rate.
"We expect to have the grand opening of our lots at the Reserve of St. Charles early next year and will soon begin selling the last 20 lots of Tamarack in Naperville. As long as we are continually able to open more 'stores,' we should be able to sustain our growth rate," he said.
Most of its homes are semi-custom, single-family homes, ranging in price from the mid-$400,000s to the high-$600,000s, Brunhofer said.
The exception is the infill construction that Meritus has been dabbling in in Park Ridge, tearing down smaller houses and building the new, more elaborate homes people want there.
"The land cost increases the further east you move," he said. "Most of the people buying there want to move up and out of the city and they are very conscious of being close to train lines."
What is your business philosophy?
"Our philosophy is to understand where the demand is and then go and serve it. We know that we have to be nimble, versatile and creative in our business. We also have to understand the differences between buyers in markets like Park Ridge, St. Charles, Inverness and Long Grove. They all have specific needs and it is important that you understand the local market dynamics."
Because Meritus is small, it is much more able to quickly adjust to changing market conditions. It is all about meeting the current needs of the buyers, Brunhofer said.
What is the best part of the home-building industry?
"I enjoy working with my team, the trades, our buyers and the Realtors. We all get caught up in the energy and excitement of what we are doing and we enjoy sharing information and skills with one another. There is always something new to learn."
What is the biggest change you have seen in the building business?
"People are tired to waiting to buy a home and they see the benefits of buying at today's prices and interest rates, so they have stopped waiting.
"The mentality of the buyer has also changed. There has been a recalibration about why it is important to have a home. Before the crash, buyers were focused on constantly progressing to a larger home. Now, they are concentrating on what they really need, and they are expecting to stay in their home for a longer period of time. They are thinking about what they will need ten years from now and they are no longer concerned about square footage. Today it is more about getting the necessary rooms."
Location has also become even more important, he said. While that has always been an important consideration, today the value of school districts and geographic location is vital.
"These days you can steal a home west of Route 47," he quipped.
What are your future plans?
"The fact that we are nimble allows us to look at all kinds of deals to find the best opportunities.
"We have purchased raw land that we are land banking until the dynamics of the market are such that it will pay to develop that land."
Brunhofer said the company is holding 30 acres of an old golf course in Addison, studying possible uses for that property, for instance.
Brian and Karen and their nine-member team are also looking at ways to further expand the custom-building side of their business. They are even considering opportunities to begin building senior independent living communities.
"We are disciplined to know our strengths so we feel confident enough to align ourselves with real estate entrepreneurs and others who have other expertises."
For more information about Meritus Homes, visit www.meritushomebuilders.com or call (847) 381-0725.
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