Development Company Focuses on Orlando Condos, Affordable Florida Home Loans

As one Jacksonville-based apartment developer builds its first condo community in southeast Orlando, the goal is clear: provide an outlet for affordable Florida home loans for those that cannot afford current home prices in the area.

The Vestcor Cos. is building The Villages at Lake Pointe, a 140-unit project boasting one important thing lacking in the new home market: affordability. Condos will range in size from 1,000 to 1,500 square feet, with prices starting in the mid-$100,000s (compared to the $250,000 median price for a new house).

“We feel this product will fill a market niche of home buyers who have been priced out of the single-family market, as well as those buyers looking for the convenience of the condominium lifestyle,” says Will Morgan, CFO of Vestcor.

For more than two decades, the company has focused on affordable housing solutions. It made a name for itself building close to 10,000 affordable and luxury rental units in apartment communities throughout Florida and Texas, including Logan Heights, a rent-restricted apartment community in Sanford.

Now, it wants to do the same with condos. To date, Vestcor is developing more than 1,000 condos throughout northeast Florida from St. Augustine to Jacksonville to Amelia Island, with prices starting at $150,000 per unit.

Vestcor is not alone: Industry insiders say many Florida real estate developers are making the condo transition for financial reasons.

First, the combination of skyrocketing land prices and building materials costs make it nearly impossible for apartment investors to make money. “The numbers just don’t work when buying land anymore for apartment development,” laments Bob Miller, an executive vice president and multifamily market specialist with CB Richard Ellis Inc.

Second, the Florida housing market has simply been good for condo development and sales recently. Last year, 4,238 condos were sold through the Mid-Florida Regional Multiple Listing Service, according to the Orlando Regional Realtor Association. Through February of this year, 757 condos have been sold on the MLS.

However, some warn the market also could work to the disadvantage of Vestcor and other new condo developers, especially as more and more projects enter the fray, increasing the competition.

With inventory growing, some developers already are making profit-cutting concessions to buyers, such as paying the first year of homeowner’s association fees and automatic upgrades on appliances and interior décor packages, explains Jack McCabe, chief executive of Deerfield Beach-based McCabe Research & Consulting LLC.

“It is a very volatile market right now,” says McCabe. “But if developers are in it for the long term, then they will be OK.”

Vestcor’s goals for development certainly look to the future, relying not only on the 150 people moving to Central Florida every day to bolster their development decisions here, but also watching the market carefully to know when to switch gears. For now, a reasonable Florida home loan is certainly the goal of buyers unhappy with rising prices in the area.

“If market conditions change and apartments provide more attractive investment opportunities, then we would certainly look to develop more apartment communities in the Orlando area,” said Morgan.