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East County Wednesday, Apr. 8, 2020 7 months ago

Lakewood Ranch builders brace for COVID-19 impact

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Sales fall, but builders are confident it's a short-term impact in Manatee and Sarasota counties.
by: Pam Eubanks Senior Editor

After nearly 50 years building homes, Pat Neal knows the housing market.

At this time of year, he expects about 30 new home sales a week across his 22 communities now selling, and that includes Indigo in Lakewood Ranch.

However, since the COVID-19 outbreak began in Florida, that figure dropped below double digits initially, climbed slightly and then dropped again following Gov. Ron DeSantis’ shelter-in-place order that went into effect April 3.

“We’re making sales at about one-third the rate,” said Neal, founder of Lakewood Ranch-based Neal Communities. “We sold 11 last week. We expect 12 this week. It’s going to be OK.

“My intent as a business is to stay on just as we are, and I think it’s going to be a blip — a long, uncomfortable blip.”

Gregg Carlson, CEO of Lakewood Ranch-based Lee Wetherington Homes, said the first sign of a slowdown began the first week in March when one client was ready to go under contract. The customer’s financial adviser suggested he “pump the brakes,” which he did.

“That was the first tell-tale sign,” Carlson said. “We started to see the traffic in the models slow down a bit.”

During the last week of the Parade of Homes, March 9-15, builders typically see a drop of 20% in foot traffic. Lee Wetherington’s models saw a 50% drop. Carlson’s company saw a drop to about a third its normal foot traffic.

“The shutdown pulled back even more on the traffic,” Carlson said.

Ed Suchora, area president for MI Homes’ Sarasota Division, said MI Homes has seen a decrease in foot traffic but increased visitors to its website with customers taking advantage of online virtual tours. 

“[In-person model tours] are absolutely down, but if you combine that with increases on the internet, it softens the number a bit,” Suchora said.

Suchora said MI Homes keeps inventory homes available, and he believes having that housing stock available will help the company through any gaps in demand for new homes. The company is planning to start construction on four new inventory homes in its Woodleaf Hammock project by the end of April.

“We believe even in the toughest of times, the best communities sell,” Suchora said. “There’s always a need for housing at some level. We believe Lakewood Ranch is one of those places that will continue to absorb a greater-than-normal share of other communities.”

Carlson, Neal and Suchora said they remain optimistic the lull will be short-lived. They have made adaptations to account for people’s health concerns and to ensure their own employees and customers are safe.

Some builders, such as Homes by Towne, have shifted to a by-appointment-only format for viewing model homes, while others have remained open but instructed sales teams to disinfect and wipe down surfaces regularly and to avoid shaking hands. The Centers for Disease Control and Prevention’s guideline of a minimum 6-foot distance between people is now a common requirement for residential and commercial builders alike.

The social distancing and cleaning practices are happening on construction sites too, with no shared water coolers and sanitizing and wiping surfaces between subcontractors, among other precautions.

Neal Communities sales associate Craig Forsman disinfects the interactive display he uses to show customers the Indigo community in Lakewood Ranch. Associates are cleaning more to ensure the health of themselves and customers.

Builder representatives said one of their major concerns had been delays in permitting and inspections from government agencies, but they have been pleased with how Sarasota and Manatee counties have continued business as usual. They said there have not been delays due to the pandemic.

“They’ve been turning everything over virtually in the same time window they did before,” Suchora said. “They’ve kept everything going for us.”

Builders said they have not seen any problems with having tradesmen on-site for projects. 

Jon Mast, president of the Manatee-Sarasota Homebuilding Association, said some of his member organizations have reported subcontractors, such as plumbers or framers, who would not work on-site if other subcontractors were present, which creates some logistical challenges.

He said some members have lost business or had projects postponed because their clients’ businesses are closed, and there’s no longer cash flow. He could not quantify how many but said the slowdown has been harder on smaller contractors. Some companies have had to lay off workers already.

Some builders said they are worried about getting the supplies they need.

For example, John Cannon, president of John Cannon Homes, said his company secures cabinets from a plant in Pennsylvania. The plant was shut down due to the pandemic but has since reopened, so the closure did not affect any projects.

Willis A. Smith Construction President and CEO David Sessions said there weren’t any immediate supply problems, but he worries longer term about getting products from certain countries, such as China, Italy and Spain, which currently are in crisis-mode.

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