Model homes are on rebound - East Valley Tribune: Business

Model homes are on rebound

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Posted: Sunday, June 3, 2007 7:12 am | Updated: 8:08 pm, Fri Oct 7, 2011.

ORLANDO, FLA. - Builders in the new Sawgrass subdivision south of Orlando are adding to what is already the fastestgrowing segment of the housing market in Central Florida: model homes.

Builders have significantly cut the number of homes, condominiums and town houses they’re putting up in the region, as demand has slumped. But model homes are making a brisk comeback.

“Before, all we needed to do was put up a sign — a ‘Coming Soon’ sign — and we’d get 400 people lined up. Now you really have to build and decorate model homes,” said David Byrnes, Orlando division president of Beazer Homes.

Beazer is opening eight new models at the Sawgrass site. M/I Homes is opening three more.

In Orlando and surrounding counties, builders have been erecting more models in recent months — hundreds of them — in subdivisions where customer traffic has slowed.

Beazer has more than doubled its stable of model homes in the past six months, to 24, in a six-county area around Orlando. M/I Homes has roughly tripled its model-home inventory, to 27, during the past two years in Orange, Lake and Seminole counties.

According to Metrostudy, a Houston-based company that tracks housing trends, builders in that six-county area have boosted the total number of model homes by more than 50 percent in less than a year.

The number of subdivision models in those counties — Orange, Seminole, Osceola, Lake, Volusia and Polk — mushroomed from 630 at the end of last June to more than 950 by the end of March, with much of the increase coming in the first quarter of the year.

“It’s a reflection of the lack of sales activity,” said Anthony Crocco, director of Metrostudy’s Central Florida and Northeast divisions.

Builders with more time on their hands also have more reason now to build the models as marketing tools. The work also helps keep subcontractors busy now that the number of homes built on speculation or for buyers under contract has fallen sharply.

According to Metrostudy’s latest survey, the number of housing starts, or new homes just getting under way, plummeted 46.7 percent in the Orlando market during the first three months of the year, compared with the same quarter a year ago.

During the local housing boom, from about 2002 through 2005, builders “were selling out quickly — before the infrastructure was developed,” Crocco said. As a result, the number of model homes in the region fell to a low of about 575 by the end of 2005, just as the sales boom peaked.

Models were not critical during that buying frenzy because investors often chose homes and subdivisions through the Internet and joined electronic waiting lists to get pre-opening prices. That helped fuel double-digit price escalation for new and resale homes. Now the speculators are gone, Crocco said, and builders have to market more, and model homes are still considered a key part of such efforts.

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