As the largest planned community in the Triangle, Flowers Plantation in Johnston County represents the unbridled optimism that developers have long had for this region’s housing market.
Approved in 1998, the 3,000-acre development has room for 7,790 homes, a staggering number that only seems more staggering given the recent slowdown in new home construction.
But after several years of sluggish sales, new home construction is ramping up again in Flowers Plantation. The Clayton community recorded 29 closings in the third quarter, the third most of any development in the region, Triangle Multiple Listing Services data show.
Flowers Plantation expects to have between 80 and 90 new home sales this year, compared with 56 last year.
What’s happening in Flowers Plantation in many ways mirrors the market shift occurring in residential developments across the region.
At its peak, Flowers Plantation was selling nearly 200 new homes a year. The community sold most of its lots to smaller custom builders, the segment of the industry that has been hit hardest by the downturn.
Many custom builders have gone out of business over the past four years, while those that survived have greatly scaled back their operations. Five years ago, a potential buyer looking for a new home in the Triangle would have had no shortage of custom-built spec homes to choose from.
But most banks today are unwilling to loan money to small builders who don’t have a signed contract and a deposit in hand.
“That’s some of the transition we’re seeing with the financing and the limitations that are being placed on builders by the banks,” said Reid Stephenson, Flowers Plantation’s director of information and sales. “It’s just constraining inventory.”
The reduction in spec homes helps explain why the Triangle’s overall inventory keeps shrinking. There were 8,825 homes listed for sale at the end of the quarter, down 21 percent from the same time a year ago.
The issue of inventory is a crucial one for large-scale developments such as Flowers Plantation. Only about 2,200 homes have been built in the community, and relying solely on custom builders is no longer realistic.
“With 5,000 more homes to be in Flowers Plantation, we need some magnitude as far as lot sales,” Stephenson said. “It’s the national builders that can come in and do that.”
Last year, two national builders, Lennar and M/I Homes, began building in Flowers Plantation, and others are likely to follow soon.
Their interest in places such as Johnston County marks an important step in the ongoing housing recovery.
The reduction in housing inventory has been most profound in areas of the Triangle that traditionally have been the most desirable, such as Cary, North Raleigh and inside the Beltline. With lots in those areas now hard to find, buyers are increasingly seeking out communities farther out where prices are more affordable.
Retailers follow rooftops
One sign of this shift is that commercial development, which had been nonexistent in recent years, is beginning to follow the new rooftops. Construction of a new Harris Teeter, the first one in Johnston County, began this week in Flowers Plantation. The store is expected to open in the fall of 2013.
While custom builders no longer have the presence in Flowers Plantation that they once did, they haven’t disappeared altogether.
Among those active in several neighborhoods is Jordan Finch’s Grey Heron Construction.
Finch’s mother, Rebecca Flowers, is the developer behind Flowers Plantation. Jordan Finch grew up amidst the peach orchards, cow pastures and cotton and tobacco fields that used to make up the family farm.
Finch, 30, started his company in 2009, just when the market was falling apart.
“It was actually an awesome thing, because I’m used to it being slow and can’t imagine it being fast,” he said. “We do eight to 10 houses a year.”
Plenty of land
Finch’s twin brother, Joshua Finch, handles sales through his own company, Carolina Settings.
Grey Heron’s homes range in price point and size, but they are all targeted at a post-recession market.
In the Palmetto Place neighborhood, for example, Grey Heron is building homes between 1,600 and 2,200 square feet. Joshua Finch said they’ve been attractive to people looking to downsize, but who still want the top-of-the-line finishes found in estate homes.
“Those people in ’06 and ’07 could afford a 3,500-square-foot home, but with today’s economy, everything’s slowing down and they’ve downsized,” he said.
The Finch brothers are about to launch a new community, Chatham, that will include 28 row houses behind the Harris Teeter. Jordan Finch said that with the scarcity of lots in some other areas of the Triangle, suddenly Flowers Plantation’s abundance of land doesn’t seem like such a bad thing.
“At Flowers Plantation, we have 30 more years of lots,” he said.