Everybody back in the pool!

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Whether or not you trust big production home builders judgment on when to get back into the real estate market, it seems that the moment has arrived.

Residential developers and homebuilders who survived the housing bust now are feasting on the remains of those who didn’t.

They’ve been on a buying spree, using cash savings to acquire finished, but unbuilt lots and subdivisions that have been stalled or lost to foreclosure or bankruptcy. They’re paying up to 75 percent off peak land prices during the housing boom, and planning to succeed where others have struggled or failed.

“It’s survival of the fittest among the developer set,” said Jack McCabe, a real-estate analyst and consultant in Deerfield Beach, Fla.

Observers say it is happening throughout Florida, but especially in regions where raw land generally is less expensive and in greater supply.

In Manatee County, D.R. Horton Homes, Medallion Homes and Minto Communities have been among the most active buyers.

Horton, a national homebuilder from Fort Worth, Texas, has purchased 170 lots and has contracts or options on 110 more in several developments. Local builder Medallion has paid $9.26 million for finished lots in four subdivisions. And Minto, a subsidiary of a private Canadian firm, has bought an undeveloped condominium project on Perico Island and several lots in Lakewood Ranch’s Country Club area.

All say discounted land prices attracted them, but it was the local housing market’s long-term potential that made them buy.

Insofar as it signals an upward trend in the market, that's good news. But it might spell trouble for the smaller builders and developers who compete with the big guys for land.

Even industry veteran Larry Webb, who has started a new home building company and has been a stout champion of the advantages of being a private builder over the years, said he thinks private builders have it tougher because financing has all but dried up for land purchases and, in some cases, land development and vertical construction.

"Publics can grab a giant share of the market," Webb said. "If a private guy buys lots, it comes out of their own pockets."

There are ways private builders can compete against publics, including building homes in markets where the publics aren't; capitalizing on specialized niches where the publics don't excel, such as infill development; knowing their local markets better than the thinly spread multi-market builders; and being more nimble in general.

"The inner-city opportunities are going to be large," said David Weekley, chairman of David Weekley Homes. "I don't see the large builders going into that. I see that as a good place to play for privates."

No event as big as the Great Recession will pass without leaving major changes in its wake. 2015 is going to be a lot different from 2005. Stay tuned--and hang on. --B.D.S.



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