By Jennifer LeClaire
The real estate downturn has forced major builders into bankruptcy, but Sunrise-based GL Homes is thriving with its active adult communities, proving an exception to the depressed region’s rule.
The well reported grand opening of Valencia Reserve, a 1,100-home active adult community in Boynton Beach, is a case in point. Last weekend, GL Homes saw 3,000 people visit its newest property -- including three couples who camped out all night to get their pick of lots. By the end of the weekend, GL registered 840 prospects and sold 24 units totaling more than $8 million. It was a vintage vignette of the 2005 housing boom, and a rare occurrence.
"There was a pent up demand for another great Valencia community," said Marcie DePlaza, a division president for GL Homes. "We had a waiting list of hundreds of potential buyers that were looking to be in the next Valencia because they would have their first choice of lot selection, meaning they would secure the best lake views."
Although communities catering to active adults are growing across the nation -- the National Association of Homebuilders reports more than 100,000 units were constructed in 2008 for a 55-plus niche that is expected to exceed 85 million by 2014 -- building an active adult community in retiree-rich South Florida does not guarantee success.
Indeed, Oriole Homes Corporation of Boca Raton, a leading developer of active adult retirement communities, closed its doors in September 2008. Other large home builders, including Levitt and Sons of Fort Lauderdale, WCI Communities in Bonita Springs and TOUSA of Hollywood, all filed bankruptcy last year.
"Some over-55 projects are failing miserably," said Jack McCabe, principal of McCabe Research and Consulting in Deerfield Beach. "It’s not just about age. It’s about location, location, location and price point, price point, price point."
GL Homes isn’t making concessions, but the builder has adjusted its price points to accommodate the current climate. GL’s prices over the past few years have ranged from the low $300s to the low $600s.
With Valencia Reserve, GL has lowered the prices of some models as much as $120,000. Prices begin at $250,000 for a two-bedroom, two-bath, 1,870-square foot home.
DePlaza points to a trend among the over-55 set: downsizing from the high-end country clubs. McCabe confirms the trend. The age of the mega-mansion, he said, is ending as consumers become more cost conscious.
However, homeowners aren’t giving up luxury amenities at sites like Valencia Reserve. The property offers a 41,000-square-foot clubhouse, tennis, basketball, a massive social hall, fitness, aerobics, multiple pools, an ample sundeck, specialty interest rooms and even a Wii interactive gaming studio.
Despite the initial success of Valencia Reserve, McCabe offers a warning.
"We’ll have to wait and see how many of these contracts actually turn into closings," he said. "I would expect a higher closing rate with single family homes than with condos. And these buyers are older, so they are established with savings and good credit ratings."
GL Homes now has eight Valencia communities in Florida, mostly on the east coast. The builder has already secured land in Palm Beach County to build its ninth property.