Gilbert-based Blandford Homes went bargain hunting and found a great deal in 135 lots in northeast Mesa that were abandoned by another homebuilder when the new-home market and economy went south.
The partially improved lots are within Highland/Desert Sky at Signal Butte and Elliott roads, and were part of the EHJP Property Holdings portfolio of 695 finished and partially developed lots. Blandford paid $5 million for the 135 lots and plans to build and sell homes on them, said Lori Anderson, the company's director of public relations.
Blandford is anxious to get started at Highland/Desert Sky, Anderson said.
"It looks like we're going to attempt to break ground in late September, early October on model homes," she said. "We're hoping to start (with homes) from the high $180,000s."
In April, Blandford purchased 86 developed residential lots at Dobson Crossing in Chandler. And in March, it purchased 229 developed residential lots at Tuscan Villas at Painted Mountain in northeast Mesa. All of the lots had been abandoned by other homebuilders.
"We are at closeout now in Chandler and we opened there May 2," Anderson said. "That went extremely fast. At (Tuscan Villas at Painted Mountain), we'll have about 35 (homes sold) this month and then another 30 in October, and then it just continues to go 10 to 20 per month after that. It's very consistent out there."
Blandford was one of the earliest builders to initiate a strategy of buying lots abandoned by other builders when the market collapsed, Valley housing analyst RL Brown said. Late last month, Richmond American Homes purchased 53 lots at Power Ranch from EHJP Property Holdings for more than $2 million. It plans to build and sell homes on those lots, as well. "What Blandford and a handful of others are doing is clearly the kind of thing we will see more and more as the recovery becomes established and it progresses," he said. "It will be the next wave."
It's likely that banks will begin partnering with builders to finish subdivisions abandoned by other builders, and participate in the profits, Brown said.
Blandford was drawn to the Highland/Desert Sky lots because of price and location, as well as the fact that they are considerably larger. The builder can offer buyers oversized lots for homes, Anderson said.
"Most likely we'll release about 60 lots when we first open and we may hold the balance of those lots for a later time for another project," she said. "I think we'll be able to come into this community and finish it off ... and do it relatively quickly like we did in Chandler, and really make an impact on that area."
Blandford will be able to offer homes at more affordable prices because the lots were a bargain, Anderson said.
"If we break ground in late September, early October, I can see us being open sometime in October-November for models and for sales, and we'll begin immediately on those first 60," she said. "Our build time is four months, so we'll see our first closings there right after the first of the year."
In the meantime, Blandford is looking for other opportunities to purchase lots cheaply and finish communities, she said.
"There are a lot out there," Anderson said.
As this trend continues, the end result will be new homes "far more affordable" than what would have been built on these lots at the peak of the marketplace in 2005-2006, Brown said.
"We're going to see more of the kind of housing that we had been used to at (these communities) with much more affordable prices," he said.