A stalled residential development in Avon is the latest to be scooped up by a builder poised to resurrect a project that failed in the recession.
Persimmon Grove, a 37-acre subdivision near Ronald Reagan Parkway and County Road 200 North, was purchased last month by Michigan-based Pulte Homes.
Pulte is tossing out Persimmon Grove’s old playbook, which called for duplexes aimed at buyers 55 and older. Pulte rezoned the land to allow for single-family homes on larger lots. The resulting 123 home sites will accommodate ranch-style homes starting in the low $100,000 price range.
Construction of the first model home is imminent, said David Compton, vice president of land acquisition for Pulte.
Persimmon Grove’s previous owner, Chicago-based Pasquinelli Homebuilding LLC, went bankrupt last year. It had started marketing Persimmon Cove in 2006, but the duplexes never caught on with buyers. Then the recession hit and Persimmon Grove fell into the hands of lender BMO Harris, which sold it to Pulte. The price wasn’t disclosed.
Failed developments spell opportunity for builders, like Pulte, that survived the housing crash that started in 2007. Roads, sewers and other infrastructure are typically in place and the developments usually sell for a discount.
But the supply of such developments is dwindling, said Jerrod Klein, vice president of sales and marketing for Arbor Homes, a locally based builder.
Klein said that in the last two years Arbor has picked up about 13 struggling developments that it considered turnaround opportunities.
Those include Hilltop Farms in New Whiteland, which it bought a year ago, quickly selling its 40 remaining lots. It had a similar experience with Rosswood, at 21st Street and German Church Road, a subdivision started by the defunct Davis Homes. It sold 40 houses there in a year. And Arbor has almost burned through the 30 lots it got at Greythorne, near Raymond Street and Franklin Road, another Davis Homes project it bought last year.
“We’re actively pursuing more of those opportunities,” but the well-located ones are becoming scarce, Klein said. “Occasionally, one falls into our lap.”
He said that Arbor is starting to have to buy raw land to develop, but starting from scratch is a pricier proposition.
Arbor and other builders are increasing their inventory of lots as the market shows signs of rebounding. Sales are up 13 percent so far this year in the nine-county Indianapolis area.
But the rebound in sales, so far, isn’t enough to exhaust the inventory of lots that were already in the planning stages when the housing market went bust.
That’s why some land brokers don’t expect to see much movement in the market for raw land.
The uptick in housing starts is great news, said Bob Lindgren, the broker for Lee & Associates who represented the seller of Persimmon Grove. “But there’s still a lot of product out there that’s going to need to be absorbed before you see earthmovers carving up cornfields into new subdivisions.”