“We’d gotten advice to get rid of our land,” Seppala said. “We listened, and we only had one project that we ended up losing money on.”
The company did have to lay off workers and scale back, but Manor Homes was able to protect its line of credit and avoid foreclosures on any property.
“Our niche through the downturn was working with developers who owned big tracts of land,” as well as with banks that had foreclosed on undeveloped land, Seppala said. “We did first-time and move-up homes, anywhere from $180,000 to $300,000.”
“Throughout the downturn and continuing on since then, we have used, where possible, local providers,” said Sam Newell, marketing director at Manor Homes. “We’ve worked a lot on sourcing. Keeping the industry alive here is important to us.”
Around the third quarter of 2012, Manor Homes began to see signs of a Clark County housing recovery, Seppala said. “Prices of homes weren’t declining any more, and sales volume wasn’t decreasing.”
Now Manor Homes is buying its own land to develop again, and is selling larger houses to more established buyers – generally in the $400,000 to $500,000 price range, Seppala said.
Next year, the developer could very well sell fewer houses than in 2013. That’s because of a shortage of ready-to-build land, he said.
“It takes time to purchase land and move it through the process,” Seppala said. Nobody has been doing any developing. We now have a lot of land that we have bought, but we won’t be able to build on it until 2015.”
Manor Homes expects to develop about 100 houses in 2014, generally at a higher price point than those it’s sold recently.
“I believe in 2014 prices will continue to increase, because of land supply and the land squeeze,” Seppala said. “The land we are buying keeps going up. Construction costs are rising too. I would say that prices are going to continue to increase. I think inventory is going to stay fairly low.”
By 2015, more land should be shovel-ready and Manor Homes should be busy again, he predicted.
It may be a good time to be a Clark County land owner or subcontractor, but people should not assume that higher housing prices automatically translate into big profits for builders.
“Our margins haven’t changed a whole lot,” Seppala said. “Our costs are going up. We’re doing well as a company, and that’s because we’re being very flexible and customizing our homes to the needs of the buyer.”