The exceedingly tight resale real estate market in the Chicago area affects homebuilders, changing their business plans and bottom lines. Fewer houses on the resale market encourages builders to invest in speculation homes that afford buyers the best of both worlds -- new, state-of-the-art houses they can occupy immediately or in the matter of a few short months.
"We don't usually build very many speculation homes because it is risky for a builder," said Todd Warshauer, director of sales and marketing for William Ryan Homes' Chicago division (www.williamryanhomes.com). "But this year we have made the calculated decision to build some quick move-in homes in our busier communities because the resale market is so tight and we want to help alleviate some of the strong demand.
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"Whether we continue to build speculation homes will depend on interest rates and demand going forward."
William Ryan Homes now has one home in Lindenhurst that is immediately ready and six more that will be available by August or September, in time for the start of school. The homes range in price from $311,168 to $470,329 and are being built in Elgin, Plainfield, Island Lake, Algonquin and Lindenhurst.
"Homeowners who buy them now may still have some choices with regard to finishes, but only for a limited time," Warshauer said.
The current high demand for William Ryan Homes, he continued, is coming from transferees and from homeowners who have already sold their homes or are confident that they will be able to sell their current homes and are willing to take that risk in order to get in on today's interest rates and prices.
D.R. Horton Homes is seeing brisk activity in its quick-delivery homes, too, said to Chris Naatz, vice president of sales and marketing for D.R. Horton's Chicago division (www.drhorton.com).
"We have sold a lot of quick-delivery homes since March. The broker community is seeing such high demand that they are looking at all options," Naatz said. "Many first-time buyers are scrambling because their leases are up. We are also getting transferees and people who sold their existing homes very quickly. All of them are looking at our quick-delivery homes."
Consequently, D.R. Horton, which always prides itself on keeping an inventory of quick move-in homes, now has 23 such homes available in seven different single-family communities throughout the Chicago area, from Johnsburg to Elgin to Oswego and beyond. It also has several available in its active-adult communities in Pingree Grove and Naperville.
Depending on the community, the homes range in price from $209,990 to $461,990 and with the exception of the active-adult communities, most feature four bedrooms or three bedrooms and a loft.
"We have homes available at all stages of construction and most sell when they reach the framing stage because that is when people can get a better sense of what they are buying," Naatz said.
Deerfield-based Meritus Homes is putting the finishing touches on a showcase home that will be complete for June delivery at The Reserve of St. Charles, the builder's community of semi-custom and custom homes three miles north of downtown St. Charles.
"This is the time of year when buyers get serious about making a purchase, so we're excited to have this showcase home to help them in their decision," said Brian Brunhofer, president of Meritus Homes (www.meritushomebuilders.com). "It's a great tool since buyers can walk through and see firsthand how our semi-custom building process allows us to tweak a floor plan and add special features and finishes to personalize a home. Of course, this showcase home is also available for purchase if buyers are looking for a custom-quality home they can move into in a matter of weeks instead of the seven to eight months it usually takes."
Brunhofer said a second showcase home under construction in the community, slated for May completion, was recently sold, pointing to strong interest from buyers in a market where inventory is tight.
"A quick-delivery, new-construction home is a great option for buyers who want to get a home with all the modern features and amenities, but in a shorter time frame than the typical process of working with a builder," he said.
Priced at $577,000, the available 3300-square-foot home features four bedrooms, 3½ baths, separate living and dining rooms, a first-floor den and a family room with a two-story volume ceiling. The home also features a side-load, three-car garage; a lookout basement with 9-foot ceilings and a deck off the family room.
Brunhofer also plans to build three speculation homes on scattered sites around the North Shore because of the "good market dynamics" the company sees in that area.
ShoDeen Homes is providing move-in ready homes for buyers in a time crunch, as well. It has one completed and another underway in its Reston Ponds community in Sycamore and seven completed and eight under construction in Geneva at Mill Creek, said Nate Amidon, director of sales.
Prices range from $229,862 to $549,990 (www.shodeen.com).
"The current low inventory of resale homes is pushing all buyers to look at new homes right now. Some are building custom homes from the dirt up and those who need to be in at a specific time, like transferees wanting to move in time for the start of school, are gravitating to our move-in ready homes," he said.
Reston Ponds in Sycamore attracts first-time buyers who are often prompted to buy based on when their apartment lease is up, Amidon said. "They are feeling an urgency to invest in their future while the prices and interest rates remain low and some are willing to move back home with their parents, if necessary, while they wait for their home to be built.
"We have noticed we are getting more educated buyers who understand the value of buying a new home versus a home that was built even five years ago in terms of energy efficiency and low maintenance and utility costs," he said.
Airhart Construction has a single-family ranch home available at its Fisher Farm community in Winfield and a ranch-plan townhouse under construction at Mackenzie Place in Wheaton. It should be completed in about 75 days, according to Court Airhart, president (www.airhartconstruction.com).
"We understand that many people want a well-appointed, custom home. But they don't have time to have one built, so that is the niche that we are attempting to fill," Airhart said.
The move-in ready home at Fisher Farm features three bedrooms, two baths, a full basement with 9-foot ceilings, two-car garage, an open floor plan and oak floors. It also features a patio that looks over a pond. The home lists for $470,524.
More than any other builder, Right Residential (www.rightresidentialllc.com) caters to the immediate occupancy market because it buys existing homes all over the seven-county Chicago area and completely rehabs them before reselling. Many of these homes are in popular, well-established communities where new-home construction is virtually nil.
"We sold 130 such homes last year," said Chris Shaxted, president. "We have found that the market is very elastic. If a home is priced too high, it won't sell. Buyers aren't necessarily looking for bargains anymore, but they are very conscious of value and price. Generally speaking, if a home remains on the market today it is either lacking in quality or it is priced too high."
Right Residential is well versed in the nuances of the market, so it is able to very effectively price the homes they rehab. And more and more, Shaxted said, the company is buying homes from owners who are not even in foreclosure. It goes in and makes a cash offer and makes the sale quick and easy, which convinces many sellers to take the discounted price.
Among the homes Right Residential has available is one located at 710 W. Noyes St. in Arlington Heights. This four-bedroom, 2½-bath Colonial home in the Surrey Ridge subdivision is priced at $439,900.
Right Residential has modernized the kitchen with new granite countertops, upper cabinets, ceramic tile flooring and appliances. In addition, all baths have been updated with new vanities, counters, mirrors and fixtures. A new furnace and water heater have also been installed and the siding, roof and air conditioning are all newer, as well.
The home features a wonderful master bath with a whirlpool soaking tub and separate shower, as well as a master sitting area, hardwood floors and a floor-to-ceiling brick wood-burning fireplace. It is located on a private corner homesite, just steps from a park and an elementary school.