Neal to build almost 1,600 homes in 2017

mjohnson@bradenton.comApril 14, 2014 

LAKEWOOD RANCH -- Keying on a housing boom expected to be the biggest since the 1970s, Neal Communities is ramping up homebuilding operations this year. It's an ambitious goal for a company that set an all-time sales mark in 2013.

After building 780 homes last year in southeast Florida, Lakewood Ranch-based Neal is projecting that it will build 1,014 homes in 2014, a record for the 44-year-old company. It is starting 14 new communities this year and is increasing housing production toward a peak goal of 1,573 homes in 2017.

At the same time, the three homebuilding companies under the Neal umbrella -- moderately priced builder Neal Communities, custom builder John Neal Homes and custom production builder Neal Signature Homes -- will further differentiate themselves from one another. The move will allow the company to maintain its reputation as a high-end and custom home builder, while expanding into building communities for working people north of the Manatee River and in the Fort Myers area.

The surge will mean more new homes on the market and more homes that families with children can afford. Those families are following new jobs at Amazon's Ruskin distribution center, and a new Hertz world headquarters in Estero, among others. Neal is targeting Parrish, Hillsborough County and Estero with new housing developments.

"To me the big issue in building homes for families is jobs," said Pat Neal, president of Neal Communities.

Neal is gearing up for a housing boom. The company is currently building in six communities in the Venice and Fort Myers markets, plans to build in five commu

nities in Hillsborough County and could build up to four communities near Estero. At the same time, the company is still building in Manatee County. Neal sold 347 new homes in Lakewood Ranch last year and recently started its 713-home Silverleaf development in Parrish.

The company's shift into high gear is not unbridled optimism.

National housing research firm Zelman & Associates recently put out data predicting the biggest new housing surge since the early 1970s. Its studies show that nationwide housing starts could approach 1.5 million in 2016, well above the 554,000 in 2009 and the 1.05 million expected this year. The firm predicts that approximately 2.7 million homes and manufactured homes will be completed in 2019, roughly equaling 1973, the high point of home construction since 1960.

Alan Anderson, the executive vice president of the Manatee-Sarasota Building Industry Association, said the national trend translates locally. Area homebuilders notched 20-percent growth in construction in 2013 and are predicting a similar bump this year, he said. National construction companies are buying more land in Manatee and Sarasota counties as they plan on similar levels of growth for the next three years.

"I think the current market as it is right now is going to continue to support this level of growth we are experiencing today and experienced last year," he said.

Neal said he thinks a big market surge and peak is coming. His company's strategic plan pegs Neal's peak building years to extend through 2019 and 2020. The baby boom generation will drive the market, he predicts.

"The short version is that we'll have quite a lot of strength," he said. "We're building for boomers."

Neal is pushing into multiple niches, including building homes for first-time buyers, people who are looking to move into bigger and better homes than they currently have, and out-of-state buyers who want their first Florida home, taking over nearly 30 percent of Manatee County's new home market based on Neal's own data and figures a dozen top builders in the local market share.

In appealing to all those sectors, the average price of a home across all Neal companies hit $294,910 at the end of February. This price is well below Neal's 2005 average price of $527,000. This doesn't mean that Neal is out of the high-end home business: Neal Signature Homes and John Neal Homes, will continue to build homes in the $700,000 to $2 million price range.

But Neal said much of what his company builds needs to appeal to people who lost assets in the Great Recession and who are looking to purchase "less of a home than they can afford."

"Now, they buy for shelter," Neal said.

The Neal companies are positioned differently now than the Neal of the early 2000s. Back then, Neal built almost exclusively for "affluent adults" and did about 50 percent of its business in land development and sales. The company got caught with about 3,000 undeveloped lots in its inventory when the recession hit.

While the company will continue to do some land development through affiliated company Neal Land Ventures, its focus will primarily be on building on its own land and selling its own homes. Now, 72 percent of company business is strictly home construction.

Neal said he will play the market surge a bit conservatively and will be concentrating on selling homes to younger home buyers as the boomers age. He never wants to see his company walk away from unfinished developments, which many other builders did during the recession. The company has built 77 communities since 1970.

Matt M. Johnson, Herald business reporter, can be reached at 941-745-7027, or on Twitter @MattAtBradenton.

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