Inside: HEYDAY HOMES: Ellenwood
Project Sold on 08.17.2011
CONSTRUCTION BLOG: HEYDAY HOMES: Ellenwood
Plans Submitted to Building Department
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We have sold the 19 home development at Ellenwood Drive to Pulte Homes, one of the largest homebuilders in the nation. It was a very difficult decision for us for numerous reasons.
As a small, local developer it is hard for us to sell a project to a larger developer. But our core belief is that the largest impact we can have is to work with other developers intent on following similar principles to ours. Like our teapot analogy that so many of you love, we constantly strive to create examples that initiate paradigm shifts that stretch further than our own production. With projects like Rock Row we set out to prove that smaller, denser, LEED rated subdivisions are a viable alternative to suburban sprawl. When all 15 homes sold out in a month the point was made.
We also felt a sense of obligation to Eagle Rock to see the project through to the end. The community has been very supportive of our endeavors on Rock Row as well as Ellenwood. Pulte is far more conservative than we are so we’re guessing what Pulte builds may be slightly less progressive than what we would have built. However, the risk for us with a project of this size is that our financing is so expensive that we need an extremely fast rate of sales in order for the project to be financially successful. Towards the end of a project of this size we are paying around $30,000 a week on financing alone so in a worst case scenario it makes sense for us to slash prices to stop the bleeding. Luckily, we have never had to do this but it could potentially result in affecting the value of neighboring properties. Pulte has far less expensive financing and is therefore under far less pressure to sell. Thus the limited upside comes with limited downside which may serve the neighborhood just as well.
So now, due largely to the success of Rock Row, the flood gates have opened. The small lot subdivision has finally gained traction with the large public builders. Of the approximately 150 small lot subdivisions that have applied for entitlements, approximately 20 have been built. Apparently these pioneering projects have given the big guys a large enough sample size to roll the dice on more complicated and sensitive infill projects. Pulte Homes would never have looked at an infill project of ‘only’ 19 homes without having Rock Row as an example. The downside is you may not think they make the prettiest buildings. The upside is that it is a huge step towards higher density and away from suburban sprawl. So while it is 19 homes that we are not building; it is 19 homes being built following smart growth principles.
Moving forward, we are using the proceeds from the sale to invest in numerous smaller projects throughout northeast Los Angeles. The first of these is a six unit project in Silver Lake which we are currently entering plan check on and expect to be breaking ground by the end of the year. Details will be posted on the website in early September.
→Plans Submitted to Building Departmentby
After a long, strange trip the first plan has been submitted to the building department.
We had our public hearing today and were approved unanimously.