Late last month Hovnanian Enterprises Inc.’s Town & Country Homes Inc. acquired a batch of distressed residential lots in a North Aurora subdivision. This is the home builder’s fourth Chicago-area acquisition in the past six months.
The company obtained 52 finished single-family home lots in the Mirador community through Harris Bank N.A. The overall cost of the lots was $1.3 million, or $25,500 per lot. After filing a foreclosure suit against the G. Carey Construction, Harris Bank took over the lots through a sheriff’s sale. G. Carey Construction is a Roselle-based company that had built most of the homes in Mirador.
Since February, Hovnanian has purchased 167 single-family home lots in Glen Ellyn, St. Charles, Mundelein and North Aurora.
Finished lots have sewer, water and road access and are ready for a home to be built. Prices for these lots plunged with the housing market, creating opportunities for builders like Hovnanian.
“The time is right because land has corrected somewhat in the marketplace,” said Andy Konovodoff in an article for ChicagoRealEstateDaily.com. Konovodoff is president and CEO of Lombard-based Town & Country, a division of Hovnanian since the New Jersey-based company bought it in 2005.
According to RW Real Estate Advisors, which recently merged with the housing market research firm, Metrostudy, a total of 3,327 residential lots sold in the suburbs last year, nearly twice the 1,727 lost sold in 2009, and up from the mere 237 in 2008.
Lots sold for about $22,197 last year, a significant drop from $63,743 in 2008.
For builders, lower land costs mean they can sell homes at lower prices and still turn a profit. Homes in Mirador will start at the base price of $210,000 to $280,000, according to Konovdoff.
The properties Hovnanian has acquired this year are in areas not heavily affected by foreclosures and where other public builders don’t have a large presence—two key criteria, said Tracy Cross, president of Tracy Cross & Associates, a residential market analysis firm based in Schaumburg.
“All of those acquisitions are very strategic,” Cross said, according to the ChicagoRealEstateDaily.com article.
The goal for the Town & Country division of Hovnanian is to sell roughly 25 homes per community with the four recent acquisitions generating about 100 closings next year.
“The demand is there, and we think sometime in the near future there will be a turnaround,” Konovdoff said in the article.