Area developers have flurry of subdivisions in the works - Omaha.com
Published Sunday, May 19, 2013 at 12:01 am / Updated at 1:21 pm
End to housing 'drought'
Area developers have flurry of subdivisions in the works

New neighborhoods are about to pop up near ball fields and schools, on an old tree farm and where soybeans once grew.

One will have space for man caves, another a church. And they're forming in areas ranging from Bellevue to Gretna to Elkhorn.

Breaking a lull of about six years, Omaha-area developers are starting to pile on the requests to create subdivisions upon which will sprout new houses. The ramp-up comes despite rising costs of construction materials and in response to what some builders see as a shortage of desirable lots now that consumer demand and the local housing market have perked up.

“I was going to be completely out of business if I didn't do something,” said longtime developer Tom Falcone, who is grading what will become a 359-lot neighborhood overlooking Elkhorn Valley View Middle School.

Said Tim Young, whose company has three Sarpy County subdivisions with a combined 630 lots in the works: “It's an end to a six-year drought.”

Consider what has happened recently:

» So far this year, developers have presented plans for at least a dozen new subdivisions in the Omaha metro area that could produce about 2,600 home lots. For perspective, fewer than 300 single-family residential lots were platted in Douglas County last year.

» From January through April, about 800 building permits for single-family homes were issued in the Omaha metro area — that's a 40 percent increase over the same period last year.

» The combined Omaha and Lincoln areas issued more single-family building permits in the past 12 months than either the Kansas City metro market or the Des Moines metro market, and just slightly less than the much larger St. Louis metro market.

Even as new subdivision development revs up, some experts predict that the supply of buildable lots won't be enough.

MarketGraphics of Nebraska, which tracks local activity, said demand in Douglas and Sarpy Counties will surpass 16,000 home lots between now and 2018.

“There is a real demand, a real need for more lots,” said MarketGraphics' Tim Underwood, who has urged local developers, builders and bankers to step up activity.

When it comes to newly constructed homes ready to sell, Underwood said, both Douglas and Sarpy have less than the ideal 2- to 2.4-months supply. That shortage is most seen in price points below $275,000.

The good news, Underwood said, is that the dwindling supply reflects a new home market that locally has “really taken off.” The number of newly finished but unoccupied houses on the market in Douglas and Sarpy dropped from 478 a year ago to 324 today.

“We've sold a lot of inventory; we're starting to increase production,” said Underwood. “Based upon the trends we're seeing, we're projecting a very healthy new home market for the next five years.”

Indeed, the outlook was promising enough that Frank Krejci of Omaha's Century Development — in the news recently for the Crossroads Mall and Nebraska Crossing redevelopment projects — also launched a new housing subdivision near 188th Street and West Maple Road.

Called Indian Pointe, that residential area is to start off with 160 buildable lots on 67 acres but eventually would grow to 600 lots on 275 acres, Krejci said. It includes room for a church, a park with trails and a community center with a pool. The first phase went before the Omaha Planning Board last month.

Krejci, whose past housing ventures include Waterloo's West Shores lakefront subdivision, said the hustle by developers to scoop up land was one tip-off that demand was building.

“Everybody started looking for land,” he said. “I had a feeling it was time.”

Nationally, new construction also is on the upswing. In the first quarter of 2013, new home starts rose 40 percent compared with the same period last year. Jonathan Smoke of Hanley Wood Market Intelligence, who analyzes housing conditions across the country, said shortages of materials, labor and lots will hamper growth, but he expects 2013 to exceed the previous year's 36 percent annual increase in new home starts.

Construction activity is good news for the larger economy. The National Association of Home Builders estimates that each new house built creates three full-time jobs and about $90,000 in new tax revenue.

The Omaha metro, to be sure, is a ways from returning to its construction heyday of 2005, when about 5,500 housing permits were issued. Most local builders doubt they'll ever see such a frenzy again in their lifetimes, however, and are feeling optimistic about the current pace.

“We're not back to normalcy yet,” said Young of Boyer Young Development. He considers normalcy to be when more than 3,000 annual building permits are issued. “We're pretty darn close; it's certainly busier.”

Moving forward, Young and others in the industry say they've learned from the past and are approaching today's new projects with more caution, and some different tactics.

Boyer Young's 136-acre Remington Ridge near Gretna, for example, will be developed more systematically and in phases to prevent a glut and to spread out financing. Grading for the first 72 of 305 lots at 192nd Street and Giles Road is to begin this month.

“If you put too many home sites on the market in one area at once they compete against one another,” Young said. “Plus, it's very expensive to have that lot sitting there.”

He recalled the recent past. By the time the national housing market collapsed, the Omaha area also had done its share of overbuilding. Many lots returned to banks when developers could not sell them. Banks, in unwanted territory, sold those lots at lesser rates, and surviving developers and builders lowered prices to compete.

“Now most of those are all cleaned up,” Young said, and developers are able to command better prices for lots.

Interest rates, meanwhile, dropped. The economy improved. Property values are rising, and more homeowners are able to sell and move up. The inventory of existing, older homes for sale also has shrunk, prompting more consumers to turn to new construction, Underwood said.

Today, before streets are even installed at the Windgate Ranch subdivision near 208th and Pacific Streets, the neighborhood's first 99-lot phase has been sold out to builders, said Falcone of Falcone Developers.

At Andresen Meadows — another Falcone project that was at the front of the recent flurry of new subdivisions — 40 homes have been built since December. Thirty more lots are committed. The 168-lot neighborhood near 180th and Blondo Streets opened for construction late last year.

“It's a very impressive start,” said Alan Hans of Advantage Development Inc., who owns luxury lots in Andresen and Windgate. Hans said demand for custom homes priced at $300,000 and above picked up last year and is swelling.

In the wake of the housing collapse and stepped-up scrutiny from lenders, Falcone said he's more discerning about where and how to build neighborhoods. He said he responded to consumer demand when he created the Windgate Ranch neighborhood on a knoll overlooking a middle school and within eyesight of a high school.

He aimed for variety in price points and style. When complete, Windgate will have 359 home sites ranging from $300,000 to $1.5 million. Thirty-three of the largest lots will be in a higher-priced neighborhood called Windgate Ranch Estates.

“We've got flat lots. We've got walkout lots. We've got walkout lots with trees,” Falcone said.

At its proposed 136-lot Clearwater Estates in Bellevue, Boyer Young is hoping to attract homebuyers with larger yards and covenants that allow for an extra garage or a recreational vehicle out back. Young said the out-building concept is catching on in the Sun Belt as people downsize homes but still want storage space.

“Maybe it becomes a man cave where a guy can do his woodworking, or a nice little place where the lady can do pilates,” Young said.

On nearly 160 acres northeast of Skyline Drive and West Center Road, Lanoha Development plans to re-create the feel of an older tree-lined neighborhood with wide sidewalks and a trail system that leads to a pool and community clubhouse.

Homes priced at $350,000 and higher will be surrounded by different prairie grasses. The proposal for the 240-lot subdivision moves on to the City Council on Tuesday. Dave Lanoha plans to have buildable lots by next year.

“It will have a very nice country feel to it,” Lanoha said.

With today's consumers emerging from the downturn a more educated shopper, developers said their projects must stand out.

“Before, anybody developed anything, basically,” said Falcone. “The public today wants to have a better feeling of what they're purchasing and where.”

Contact the writer: 402-444-1224, cindy.gonzalez@owh.com

RELATED: More Omaha neighborhoods see building uptick

Contact the writer: Cindy Gonzalez

cindy.gonzalez@owh.com    |   402-444-1224    |  

Cindy covers residential and commercial real estate, economic development, tourism and hotels, and immigration issues related to businesses.

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