Builder scoops up troubled developments to sell homes cheap
An Ohio developer has acquired seven suburban housing developments from bankrupt or other homebuilders, with plans to sell townhouses or single family homes for about $100,000 less than before.
Columbus, Ohio-based M/I Homes Inc. has targeted distressed, unfinished developments and scooped them up for below market value, and plans to buy three more within six months. It intends to finish the work and lower the sale prices, said Ron Martin, president of M/I Homes Chicago, based in Naperville.
“When you provide an affordable product in a good area, they sell,” Martin said.
M/I Homes has entered the Chicago suburban market at a time when many developers, such as Kimball Hill, Neumann Homes and others, have gone bankrupt or are struggling because of the rough real estate market, high unemployment rate, tighter mortgage restrictions and a tenuous economy. The land, in many cases, remained undeveloped or partly unfinished.
M/I Homes has seven developments under way, including its most recent acquisition of 146 lots near Route 59 between Ogden Avenue and 75th Street in Naperville. It was previously owned by now-bankrupt Kimball Hill Inc., formerly of Rolling Meadows.
M/I Homes already has installed the roof and windows in its Naperville model.
“We’re moving full steam ahead,” Martin said.
The Naperville community offers four townhouse plans, ranging from 1,570 square feet to 1,910 square feet for each unit. There are six units per building. They range in price from $190,000 to about $240,000, Martin said.
Another Kimball Hill project that went belly up, Shelburne Crossing in Winfield, was bought in January 2009. M/I Homes also purchased two developments from Lakewood Homes, one called Easton Park in Carol Stream and the other Whitmore Place in St. Charles.
Others also purchased between 2009 and 2010 include Church Street Station in Hanover Park from now defunct Neumann Homes and Sutton Ridge in Aurora, lost to the bank by Wheaton-based Wiseman-Hughes Homes, Martin said.
“We’re buying all those in distressed situations where the prior builder didn’t succeed,” Martin said. “And we intend to buy more. We have the cash on hand for the right opportunity.”
M/I Homes, along with Pulte Homes and DR Horton, have become aggressive in the last year by looking for or acquiring properties or developments, said Tracy Cross, principal of Tray Cross & Associates, a Schaumburg-based real estate market research firm.
In Cross’ recent market report, M/I Homes was rated No. 1 for the first time with overall sales volume for 2010. M/I Homes sold 146 townhouses and three single family homes.
Distressed housing developments are their targets, but it depends on how “distressed” they are, Cross said.
“They’re not cherry picking, but these are strong properties in superior locations,” Cross said.