K. Hovnanian Homes is almost out of inventory homes available for purchase, a sure sign that the tide is definitely turning. "When I started here in June 2007, we had 380 inventory homes to sell, and now we only have 16," says Mark Hodges, president of K. Hovnanian Homes, whose Southeast Florida communities include Palm Beach Plantation and Greenwood Manor in Royal Palm Beach, and Vistabella/Firenze and Monteverde in Boynton Beach.
"It's really the story of the day," says Hodges, who has been with K. Hovnanian for nearly two decades. "The inventory of existing finished new homes is decreasing, even with the competition from foreclosures and short sales. What that means for the buyer is that the chance to buy a new home at historically low prices is almost over."
Time is running out
To illustrate that time is running out for buyers who may be waiting for prices to drop even further, Hodges points to a recent study by Brad Hunter, chief economist and national director of consulting for Metrostudy of West Palm Beach.
"The study shows that the number of finished vacant homes in Palm Beach County was down to 644 at the end of the first quarter. That number was in the thousands at one point," Hodges says. "We're now down to a three-and-one-half month supply of finished new homes, which means now is the time to buy."
The message is one that K. Hovnanian has taken to heart in its own business plans.
"We're intent on continuing to grow in Southeast Florida and are currently exploring numerous land opportunities in Palm Beach County, from Delray Beach and Boynton Beach, to West Palm Beach and Palm Beach Gardens," Hodges says.
Good for the consumer
While there is little, if any, raw, undeveloped land left in the area, K. Hovnanian is looking to take advantage of tracts of land initially purchased by builders who aren't making it or have since gone out of business -- at a price that will allow the builder to make purchasing a home even more affordable for today's buyers.
"The price of land during the boom drove the need to build bigger and bigger houses, with more and more features, on smaller pieces of land," Hodges says. "Now that land prices are coming down, we can build smaller, more affordable homes, which is good for the consumer."
As further proof that the tide is turning, Hodges points to another report that shows 12 months of straight decline of resale homes on the market.
"Contracts are up, and listings are down, and supply and demand will intersect again in the near future. When that happens, prices will increase," Hodges says. "For now, though, there are still some really great deals to be had. We're back to 2001 prices, and interest rates are at a 30-year low, making homes more affordable than ever."
Can't beat the value
Perhaps nowhere is that affordability better seen than in K. Hovnanian's offerings at Renaissance Commons. Located on the corner of Gateway Boulevard and Congress Avenue in Boynton Beach, Renaissance Commons is one of the area's most exciting "live here, work here, play here" opportunities. Prospective buyers will likely be impressed by the three- and four-bedroom luxury townhomes at Vistabella, priced from $199,000, with closing costs paid on select homes; and Monteverde condos previously priced at $279,000, selling now for just $99,000 for buyers who can pay entirely in cash.
"We had 60 people call in the first two days, but they need to understand that banks are not approving loans in any amount for condos until the building is 70 percent sold," Hodges says. "That number was recently raised from 50 percent."
As for its single-family-home communities of Palm Beach Plantation and Greenwood Manor, Hodges says the prices are at rock bottom and non-negotiable.
"We had a buyer last week who absolutely fell in love with one of our homes, but walked away when I wouldn't budge on the price," Hodges says. "As soon as he left, I told my Sales Consultant and said, 'He's going to regret passing up the house of his dreams for a few thousand dollars.' " The home sold to another buyer with a few days, at the asking price.
Tweaking their products
As they sell their remaining existing homes and look to build elsewhere, H. Hovnanian intends to tweak their products.
"We'll definitely remain in this market in a major way, but with to-be-built homes only. If all goes well, we'll have the land in place by the fall and start building models to introduce early next year," Hodges says.
As for the tweaks, Hodges says that two-story foyers are out -- a preference that indicates that today's family of four has realized they can live surprisingly comfortable and well in 2,000 square feet as opposed to 3,000 square feet during the boom.
"Smaller means lower taxes, insurance and utilities, and less maintenance," Hodges says.
Hodges also reveals that K. Hovnanian plans to be the greenest builder in South Florida when they start building again.
"Green is not just about being energy efficient," he says. "It's also about using more environmentally friendly materials and being more waste conscious. Those kinds of things are extremely important to people today. And they're important to us, as well."
One final adjustment is likely to occur with the scope and scale of amenities that are offered in future K. Hovnanian communities.
"After people ask about prices and taxes, they ask about HOA fees," Hodges says. "While we want to provide the amenities that residents will value and use, it's just as important to them that they keep their monthly costs as low as possible. When given a choice to have a guarded gatehouse and a roaming guard, or saving money on HOA fees, they typically choose the latter."
So bullish is Hodges on the market in general and South Florida in particular that he offers these final words of wisdom: "By the spring of next year, we'll be seeing the full effects of the turnaround, with prices stabilized, demand increasing and with some nice appreciation, which is why people who have been waiting should buy now."