Small Builders Finding Florida Housing Market Niche

Jumping into the construction business these days is like diving into a swimming pool… with no water. The Florida housing market simply isn’t there.

But Beckwith Homes is donning swimming trunks and heading toward the diving board anyway, so to speak, according to the Ocala Star-Banner.

Beckwith is betting that small home builders can still do well in the Ocala housing market and throughout Marion County, despite the gnashing of teeth by large developers that are sitting atop big inventories they can’t unload.

Beckwith is developing Silver Run Forest, a subdivision north of State Road 40 and east of Baseline Road near Silver Springs. It is buying 20 acres with plans to build on 55 lots.

The company is buying the property from Ocala-based Silver Run Forest LLC, paying $3.6 million for the land.

Although the Central Florida housing market is tough right now, it hasn’t dried up altogether. New homes are still being built throughout Marion.

Florida mortgage applicants still need homes to live in, and niche markets exist for builders that are flexible enough to fill them, said Sean Snaith, director of the Institute for Economic Competitiveness at the University of Central Florida.

Beckwith executives think they can make a go of it.

“I’m a realist. I know what the competition is doing,” said Beckwith president Cheri Bass, who says her company has something going for it that big developers don’t: It isn’t saddled with a backlog of housing inventory and can build homes to suit.

“And that means you pick the cabinets, the carpet. You pick the lots; you pick everything,” she said.

To remain competitive and keep inventory to a minimum, Bass said, Beckwith is building five “spec” homes - ones that don’t have buyers yet - and one model at Silver Run Forest, just to show what it has to offer.

Construction on other homes will start when customers order them. The new subdivision will hook up to Marion County water and sewer services.

“We’re taking a very conservative approach to see what the market is going to be like,” Bass said. “The conservative approach is the right approach.”

Beckwith, along with other small builders, learned that lesson when mortgage rates eased up and the housing market quickly cooled after years of skyrocketing.

Big builders that traded on Wall Street had the added pressure of making investors happy, and are now hurting amidst rising home loan rates and bad credit Florida mortgage concerns.

The companies built as much as they could when the market demanded more homes, regardless whether they could sell them fast enough.

“They had quarterly numbers they had to hit,” Snaith said.

When demand fell, major home builders were stuck with unwanted inventory. What also fell was the value of their stocks.

Pulte Homes was trading at nearly $50 a share back in September 2005, but has dropped by more than half, sliding to about $22 per share.

Lennar Corp. was selling at about $70 a share two years ago. But awash in the South Florida housing market glut, the building giant has struggled, and stock tumbled to $34 per share.

“It’s in the doldrums now,” Snaith said. “But the reality is the housing market wasn’t a bubble. There was a real demand and it is still there.”

And that’s where small builders like Beckwith can find their niche.

Beckwith is based in Cornelius, N.C., and has built most of its homes in Charlotte and vicinity. Most of its homes cost in the $200,000 range and are situated in relatively small subdivisions.

The home builder, created in 2001, built 107 houses last year.

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