For years, certain respected Chicago area homebuilders have been viewed
–justifiably–as suppliers of basic, moderately priced homes. Often these were bought by young couples during the financially strained early years of marriage or careers.
During the recent surge in the market, some of these builders have decided to move up and offer more expensive homes.
Such firms as the Hoffman Group, Kimball-Hill Inc., and Sundance Homes, for instance, now are adding to their offerings upscale single-family and townhouse developments that may change permanently the way these companies are viewed by the public and themselves.
”We`re adapting to what`s happening in the marketplace,” says Bob Russo, vice president of the Hoffman Group.
”I would say the majority of our business previously has come from the first-time home buyer,” he says. ”That`s turned around in the past couple of years. The big market today is not the first-time buyer. Not in Chicago, nor in the rest of the country. The big market is the move-up buyers. We think the buying in `86 and `87 will be move-up.”
The reason for this, says Russo, is simple.
”The reason is the low interest rates. They allow people to sell their present home and buy a new home with more square footage. That`s why the housing market in Chicago is hot today.”
At five of the company`s subdivisions, prices and amenities this year are aimed at a higher level of buyer.
”We have Northgate in Arlington Heights, where the prices are $145,000 up to $195,000. That includes air conditioning, a basement and a fireplace. Traditionally, we have not merchandised our homes with all those features in it. But because of that market and our market research, we put them in.
”At Astor Place in Buffalo Grove our price range is $129,000 to $167,000. That`s for a base house that doesn`t include the basement or fireplace or air conditioning. Victoria Crossing in Hoffman Hills is priced from $121,000 to $150,000. Hunters Crossing in Carol Stream has homes from $99,000 to $125,000.
”We`re introducing a new townhouse design at Ashton Park in Schaumburg. They`re priced from $108,990 to $144,990, and we`ve already presold 17 of them.”
The increase in size and amenities that has accompanied the price increases has helped the company do twice as much business in the past three months as it did in the same period last year, says Russo.
Woodridge-based Sundance Homes heretofore was ”definitely in the first-time buyer market,” says president Maurice Sanderman. ”Our single-family homes were $80,000 to $100,000. Some of our attached single-family homes are $65,000 to $80,000.”
Last year, though, the company built six custom homes in Highland Park in the $400,000 range. It also built 15 custom homes on individual lots.
A custom home division was started, but ”it never took off,” says Sanderman. ”We were too restrictive about what we would build. We were building from our own plans, but most people wanted to build from their own plans with their own architect. With the strong market we`re in now, we`ve kind of dropped out of the spot market. We`re too big to be a custom builder.”
Like Hoffman, though, Sundance continues also to build for first-time buyers.
”You can buy from us for $85,000. But the average price is in excess of $100,000 in our so-called starter communities.”
The company has built more than 3,500 homes, mostly in Du Page County.
In 1985 it delivered 350 houses with an average selling price just under $100,000, says Sanderman.
”So far this year the average price has been $125,000, but this is misleading. We have some new developments that have much higher priced houses. Basements are standard, and in some cases fireplaces, air conditioning and other amenities. These are all indicative of a second- or third-time buyer.” At Lake Zurich, Sundance is completing construction of model homes for Timber Lakes Estates, a 66-unit development where average price will be $160,000.
A ”very similar” design will be used in Glenview at Meadow Wood, scheduled to open his week. Prices will be in the $200,000 range.
”In Glenview we ran a few ads that merely announced that we were going to build some single-family homes there,” said Sanderman.
”We`ve already gathered a list of 1,000 names of people who have expressed interest and to whom we`ve sent brochures. That segment of the market is enormously strong.”
Much of that strength is caused by low mortgage interest rates, he says.
”People decide how much they can pay for a home almost exclusively on the basis of the size of the monthly payment. Compared to 18 months ago when the rates were 12 and 13 percent, the monthly payments at today`s 10 percent are reduced tremendously. The lower monthly payments have given people the attitude that they can go out and buy the nice, big house that they really want.”
Kimball-Hill Inc., based in Rolling Meadows, is another company that has expanded from moderately priced housing into move-up.
Having had a taste of building expensive homes, managers of the 48-year-old company found that they liked it, says Lisa Porter, vice president for marketing and sales.
”In recent years we had primarily done multifamily homes,” says Porter. ”Last year we built a 4,200-square-foot luxury home in Barrington that cost $388,000. Then we did another that cost $427,000. We had a lot of fun designing those homes.”
In February, the company started construction of Lake Arlington Town in Arlington Heights, which will include variously priced homes including single- family and duplex units aimed at the empty-nesters and professional persons 50 years old and older.
Prices will range from $160,000 to $185,000.
”These are the most expensive homes we`ve built in our developments,”
says Porter. Our previous buyers have been happy with our work in moderate-priced homes. Now many of these people are becoming move-up buyers. We want to have the opportunity to offer them their third or fourth Kimball-Hill home.”
