Suburban home builders are scrambling to keep up with what they say is the most intensely competitive marketplace in memory.
One result of that scramble is a trend toward repositioning subdivisions where sales have slowed because of stiffer competition, tired models or market shifts.
James Hughes Jr., partner in the Wheaton-based building company Wiseman-Hughes Enterprises Inc., believes this repositioning of subdivisions indicates that the life cycles of housing designs are getting shorter.
“The auto companies at least tinker with their designs every year, even the models that are selling well,” he said. “We have to be the same way-constantly trying to improve.”
Hughes said that any subdivision, no matter how great its location or housing stock, will lose steam after about two years or 150 sales, whichever comes first.
“I think about 150 units is ideal for one product at one location,” he said. “Then it’s time for a change, to give the market something new.”
In the mid-1980s, Wiseman-Hughes designed the Classic Series, a new line of “high-end entry-level” homes first offered at the west suburban Fields of Naperville. Market response was so strong that the company could hardly build the houses fast enough.
The same line of homes was introduced a few years later with equal success in North Aurora and Bolingbrook, where the price ranges were from $137,500 to $169,500 and $139,900 to $176,900, respectively.
But now sales of the 5-year-old home designs have leveled off, and the Wheaton-based company has introduced a new line of homes that is experiencing strong sales at Caton Crossing in Joliet and Four Pointes in Aurora.
“We were victims of our own success,” said Hughes, referring to the firm’s Brookwood Estates subdivision in Bolingbrook and Timber Oaks at the Fox in North Aurora.
In both cases, he said, initial sales were excellent, attracting moveup buyers from the immediate area. At Timber Oaks-which opened in 1989 amid boom times along the nearby East-West Tollway-the company sold 65 homes the first year. In Bolingbrook, Wiseman-Hughes sold 80 homes in 1990, the year Brookwood opened.
But in recent years, the local moveup market has tapered off, while the company’s new entry-level homes have sold well at two new subdivisions.
So the builder decided to reposition Brookwood Estates and Timber Oaks by offering new, hot-selling home designs.
At Brookwood, the new Heartland Series homes are base-priced from $119,900 to $144,900 with five floor plans available. Ninety of the 231 home sites remain for sale, and Hughes said the second product line will shorten buildout time to 12 months from two years.
At Timber Oaks, the new homes are priced from $114,900 to $139,900, and sixty-five of 214 home sites are available.
Because the new homes are almost as big as the Classic Series, Wiseman-Hughes did not have to replat any lots. Thus, the number of home sites remains the same.
Hughes said his firm has discovered that introducing the new Heartland Series hasn’t crippled sales of the Classic homes, but rather “seems to have given both subdivisions new vigor.”
“You have to work with the market that’s out there, and right now that’s first-time buyers,” he said. “We’ve expanded our marketing window to include first-time buyers at these two sites.”
At Brookwood Estates, Wiseman-Hughes in 1992 sold 45 of the Classic homes, more than 70 percent of which went to moveup buyers, which Hughes calls the “softest market for the last 18 months.”
In the middle to late 1980s, moveup buyers drove the market, but today Hughes describes most prospective mover-uppers as “nervous about their jobs and the economy, so they say, `Why make a change when I have a roof over my head? I’m gonna wait.’ “
The new Heartland series is just slightly smaller-ranging from 1,375 to 2,045 square feet-than the Classic homes-which range from 1,450 to 2,225 square feet-yet the Heartland homes cost at least $20,000 less. The older homes have more standard features-like basements, optional in the new line of homes-but Hughes also attributes the new homes’ success to more efficient design. For example, in the Heartland series, the second-story hallway bath abuts the master bath, saving on plumbing costs.
“When we designed the Classic homes back in the late 1980s, we were targeting a specific market-the moveup buyer,” Hughes said. “So we included many features as standard instead of options.
“But with the Heartland series, we’ve adopted more of an a la carte marketing strategy,” he said. “The buyers tell us what they need in their homes.”
While Wiseman-Hughes aggressively pursues first-time buyers in the west and southwest suburbs, moveup buyers are being lured by MCL Companies to its revamped development in far north suburban Antioch.
Heron Harbor on Lake Marie is a joint venture of MCL Companies, the largest builder of single-family homes and townhouses in Chicago, and the Fogelson Companies Inc., developer of the Central Station mixed-use project in the South Loop.
Fogelson owns the land, and MCL is the designated builder for the rolling, partially wooded 457-acre site that includes a private 250-acre nature preserve created in partnership with the Land Conservancy of Lake County.
Opened in July 1991, it is now at the 18-month sales threshold with its original seven models, the Lakeside homes, offering three to five bedrooms, 2 1/2 to 3 1/2 baths and 1,875 to 2,735 square feet of space base-priced from $159,900 to $199,900.
“We found a disproportionate amount of upgrading with our 46 sales to date,” said Garrison P. Benson, MCL vice president and project manager. “Extras typically amount to 3 to 5 percent of the base purchase price, but we experienced 20 to 25 percent in upgrades even though we thought we had a higher level of finish built into the base price.”
The reason, according to Benson, is that Heron Harbor attracted buyers who wanted a different lifestyle rather than just more house. For example, he said, almost 60 percent of their 46 buyers have come from northwest suburbs where they “tired of congestion and wanted more open space.”
But major shifts in the competitive environment slowed sales, according to Benson. “Fifty percent of home sales were in our first three months, and the other 50 percent in the past 13 months.”
He said there were 1,600 competing units in Heron Harbor’s original price range in 1991, but by last summer there were 4,321 competing units in north Lake County in the $140,000 to $175,000 range.
“We’ve lost sales to developments in Grayslake, Gurnee and Round Lake Beach with 2,000-square-foot homes priced from $175,000 to $185,000 on smaller lots, even though this was not our market,” he said. “At the higher end we lost sales to custom homes on five-acre lots in Spring Grove.”
A market and sales analysis revealed the need to reposition the subdivision.
“Our average selling price was $225,000, well above the base range,” Benson said. “It reinforced the decision to move up and accommodate what had emerged as a higher buyer profile than we’d originally anticipated.”
“We made the decision to move into the $200,000 to $250,000 price range, where there is no competition,” he said. “This is a smaller market base but with better absorption.”
Three models showcasing the new series, called High Meadows, are under construction and will open in May.
Priced to match the current average sales price with options, the new 60-foot-wide homes will range from 2,900 to 3,100 square feet with the option of another 1,500 square feet of living space in a finished lookout or walkout basement.
In addition to three-car garages and four to six bedrooms, the new floor plans will offer master suites with sitting rooms, a separate family room for children, a den, a library and lots ranging from 12,500 to 18,000 square feet.
“These models have volume space and larger room sizes, giving the homes a stately feel,” Benson said. The smallest bedroom, for example, is 12 by 11 feet.
Other factors also can influence a developer to reposition an existing subdivision.
At Charter Oaks, a subdivision of moveup single-family homes in west suburban Bartlett, Smykal Associates now offers three additional floor plans previously available at nearby Brampton Place, now sold out.
“Brampton Place was a big success, selling out 105 homes,” said Peggy Taheri, vice president of sales and marketing for Smykal. “But if we had offered the Brampton Place homes at Charter Oaks, which is nearby, we would have been competing against ourselves.
“Now that Brampton Place is completed, we’re offering three of those floor plans at Charter Oaks, giving us a total of 13,” she said. “Having this many floor plans will give the community a more established, customized appearance.”
Now half sold out, Charter Oaks will have 97 homes base-priced from $199,900 to $269,000 and ranging from 2,090 to 3,077 square feet.
John Curtis, sales manager for Boulder Ridge Country Club in northwest suburban Lake in the Hills, agrees that change is a key to achieving success in today’s highly competitive market.
“That change can be as simple as redecorating a model or as complex as redesigning a floor plan,” he said.
Boulder Ridge, a 436-acre golf course community, had a strong sales year in 1992 with 42 homes and lots sold. Nevertheless, Curtis said addressing buyers’ changing desires is the best way to ensure an even better 1993.
As a result, several models at Boulder Ridge are undergoing everything from minor repairs to major surgery. In the process, Curtis said Par Development, developer of Boulder Ridge, is adding new “hot buttons,” redesigning a floor plan and redoing decors.
