New Millennial Homes' developer cites rapid turnover as an affordability factor.
By SHARON L. BOND
Published June 1, 2003
ST. PETERSBURG - New Millennial Homes, the developer that just announced an affordable housing program here, spends about 77 days building each of its houses.
That matters because it is one of the reasons the company can offer new houses throughout St. Petersburg for $87,900 to $124,900, according to Michael Shrenk, New Millennial president.
"We've been able to reduce the construction cycle time from 120 days down to 77 days. That allows us to turn the property over (faster) and use our money more efficiently," Shrenk said.
In existing homes, buyers in south Pinellas can get about 1,000 square feet for $100,000, Neighborhood Times found in a recent look at home prices. Yet New Millennial is offering 1,200 to 1,800 square feet of new construction in its price range.
"We do a lot of homes, and we do get some economy of scale," said Shrenk, citing a second reason.
A third is the excellent interest rate New Millennial is getting on its $4-million credit line from Republic Bank and Fannie Mae for the affordable housing program announced last week.
"We can pass that on to the customer, too," Shrenk said.
New Millennial plans to build about 20 homes on vacant lots in established neighborhoods. It has purchased or has under contract 16 lots, most of which are south of Central Avenue. Prices on the lots ranged from $15,000 to $35,000.
One advantage to building in established neighborhoods is that affordable housing is not put in just one area of the city, said Thomas K. deYampert, manager of St. Petersburg's housing and community development.
"It provides the homeowner with the ability to select the neighborhood he wants to live in," deYampert said.
Vacant lots in existing neighborhoods is about the only land left for home building in St. Petersburg, deYampert said.
Shrenk said land costs have escalated faster than construction costs in home building.
"Over the past three- to four-year period, there has been tremendous appreciation in the value of lots," Shrenk said.
As an example, he cited the first home the company built in 1998, a three-bedroom, two-bath for $60,000.
"Today the lowest price on a home we have is $85,000. It's gone from $60,000 to $85,000 in 41/2 years. Most of that is in the appreciation of lots."
This year alone, Shrenk said his experience has been an appreciation in land costs of about 15 percent compared to a rise in construction costs of 4 percent.
New Millennial Homes has done a similar program in Hillsborough County. Shrenk said about 85 percent of the buyers get loans backed by the FHA, and about 15 percent apply for assistance through several aid programs offered.
The city of St. Petersburg is not involved in lending to New Millennial now but could aid in the future by providing no-interest, 12-month loans on model homes, said deYampert.
"We have done that with other builders, and it seems to work out. The funds are repaid 100 percent," deYampert said.
