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Published: Sunday, 12/11/2005

After recent torrid pace, sales in new area subdivisions slow

BY GARY T. PAKULSKI
BLADE BUSINESS WRITER
New houses like the one being shown by Moe Sanner are unsold as buyers await sale of their current homes. New houses like the one being shown by Moe Sanner are unsold as buyers await sale of their current homes.
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Young, single, and eager to move from West Toledo to a new housing development in trendy Sylvania, he waited and waited.

For his home to sell.

"It is a nice house, but the problem is there were 119 others in the immediate area on the market," said agent Sharon Jording, who is still trying to arrange the transaction.

For subdivision developers in the Toledo area, that situation has become all too familiar in recent months.

Amid concerns about rising interest rates, gasoline prices, and home heating costs, along with more unsold homes, sales of lots in new subdivisions have slipped from their strong pace of recent years.

Some developers in the Toledo area report year-over-year declines of up to 20 percent.

The lull follows a period of torrid development locally. Over the past five years, developers have submitted plans for more than 7,800 lots in 140 new subdivisions, according to records in Lucas and Wood counties and the Bedford Township office.

Although that would be a drop in the bucket for fast-growing areas like Las Vegas and south Florida, it is significant for a region without population growth.

And demand for the lots was strong. An informal Blade telephone survey last week of developers who submitted plans for 606 lots in Lucas and Wood counties in 2002 found that all but 4 percent have been sold.

Although sales are good at many development companies, others have experienced problems, especially in higher-end subdivisions.

When owners filed plans for Sanctuary in the Woods in Perrysburg in early 2004, they envisioned an enclave of million-dollar country estates on oversized wooded lots priced from $225,000 to $350,000. But nearly two years later, all 16 of the lots remain unsold.

"We overestimated demand for the product," said Chris Finkbeiner, vice president at Retreat Associates Inc., the developer. Reasons include the region's lukewarm economy and marketing mistakes, he conceded.

The house in Monclova Township that Brandy Barrett and her husband are considering. The house in Monclova Township that Brandy Barrett and her husband are considering.
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The subdivision is on a rolling 375-acre parcel that was once home to a Catholic high school for boys preparing to enter the priesthood. The firm's other housing developments on the site, with a combined 175 lots, have had no shortage of buyers, Mr. Finkbeiner said.

Now, developers are studying ways to re-market the troubled subdivision.

"Obviously the market is a little soft right now," said Charles Schmalzried, president of the Home Builders Association of Greater Toledo. "There's a lot of concern about the economy and the number of homes for sale across northwest Ohio."

Craig Harris estimated that lot sales and construction starts have slipped 20 percent at his West Valley Development, Toledo, the past nine months. The firm's subdivisions include Eckel Trace in Perrysburg Township, and Homestead at the Quarry, Monclova Township, and River Bend in Middleton Township.

West Valley delayed plans to begin installing sewers and paving roads for new tracts by a few months, but still plans to have lots ready for sale by May, Mr. Harris said.

Builders typically purchase up to 75 percent of lots in higher-end subdivisions that don't require buyers to use builders chosen by the developer. In midpriced developments, the share gobbled up by builders drops to half, according to Mr. Harris. They then erect homes on the site, and start looking for buyers.

But rising material costs, a property glut, and other factors have prompted builders to slow construction of "spec" homes, or those not sold in advance. With fewer such homes on the market, supply and demand locally likely will even out by spring, Mr. Harris predicted.

He said he is not alarmed by the sales slump, noting that Toledo rarely sees the steep boom-and-bust cycle common in some markets.

"We have our little boom spikes and bust spikes but we never see boom to bust," Mr. Harris said.

Residential developers in metro Toledo are conservative, local experts said. Even large subdivisions are usually developed a few dozen lots at a time to spread out the costs of installing water lines and sewers, paving roads, and pouring cement for sidewalks.

Those expenses alone can amount to $16,000 a lot, said developer Brian Gruber, of Ridge Stone Builders, Perrysburg. Add in land acquisitions costs and other expenses, and developers are on the line for hefty loan payments that become burdensome when lot sales stall.

The risk is smaller when subdivisions are developed a chunk at a time, developers point out.

Like other developers, Mr. Gruber has watched sales slow in recent months.

"People are unable to sell their houses, so they can't start on new ones," he noted. The smallest decline, he said, has been in homes in the $175,000-to-$250,000 range.

For Steve Mitchell, of Mitchell Development, Sylvania Township, the slowdown began in the second half of this year.

The firm responded by delaying plans for additional lots at existing subdivisions.

"We've got some sections of subdivisions that we're waiting to see what happens in the spring before we pull the trigger," Mr. Mitchell said.

At Moses-Schlachter Group, which has played a large role in the development of Sylvania Township, lot sales are down about 5 percent from 2004, said Jim Kessler, spokesman for the firm that also has offices in the township.

"Buyers are taking a much more conservative approach," he said. "They want to make sure their existing home is sold before they come out and talk about a new home."

Other developers said they have experienced little or no changes from 2004.

"We're even over last year," said Brandon Wamsher, of MillStream Development Co., Sylvania Township.

"We've had some spottiness," said Joe Mehling, sales manager for Forrester Wehrle Homes, Sylvania Township, which is listed among the nation's 400 top builders. "But if December goes as last year, we'll have the exact same sales in 2005 as in 2004."

At Watermark Ltd., developer of the successful Waterside subdivision in Monclova Township, sales have risen 20 percent over 2004, although the year started slow, said Duane Ankney, president.

The development, with units from $160,000 to $200,000, caters to the "active adult" market. "We ran almost the reverse of what other developers experienced in the first half of the year," he said.

Contact Gary Pakulski at: gpakulski@theblade.com or 419-724-6082.



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