The co-owner of RE/MAX Professionals in East Greenwich, Lenny Iannuccilli has brokered sales in developments throughout Rhode Island over the years. Recently one of the subdivisions hit hardest by the collapse of the housing bubble, Cottrell Farms in Tiverton, has started gaining momentum by adopting a new strategy: hiring contractors to build instead of selling to them. Iannuccilli took a few minutes to discuss what he has seen in Tiverton over the last few years and what it means for the market.
PBN: Tell me about Cottrell Farms, how it came about and what makes it different from other developments?
IANNUCCILLI: Cottrell Farms is situated on 145 acres in the waterfront town of Tiverton. Developed by Campanelli Properties, the neighborhood features 61 homesites designed to compliment the natural surrounding landscape and to blend with the two upscale adjacent neighborhoods of Daniel Church Estates and Beachtree Estates. The development of the project commenced in 2004 with approvals being obtained in 2007 and road construction immediately thereafter. The fact that the neighborhood is nearly 90 percent complete is somewhat of a miracle in today's real estate market.
What makes Cottrell Farms different is that it was designed and constructed as a neighborhood for high-end homes from $699,000 and up. However, the timing for the project could not have been worse. As lots were ready to be rolled out for sale, the real estate market had begun to plunge. With sales activity far less than impressive, the development team was forced to revisit prices of the lots and square footage requirements of the homes. Originally, intended to be priced between $200,000 and $240,000, with homes in excess of 2,700 square feet, a revision of 2,400 square feet and prices between $160,000 and $200,000 were implemented, however, there was still little activity. We finally revised our building requirements to 2,000 square feet and lowered our prices to between $120,000 and $160,000. With the real estate market continuing to plummet and Wall Street in crisis, we had little activity.
Our primary market for subdivisions of this nature is small to medium size builders who, with their own financing, construct homes on speculation. Campanelli Properties has been solely involved in residential land development for the last 20-plus years in Rhode Island. At this juncture with Cottrell, a new strategy was necessary to drive activity and ultimately sales. Campanelli selected three builders to retain under contract to build homes in the subdivision. With home construction underway, activity improved considerably. Within a short amount of time, three initial homes were sold and three more were started. This activity also attracted other builders to invest in the project and build spec homes. Of course, custom homes are always the residual result of spec home sales in a subdivision such as Cottrell. And many of the builders began to get contracts.
PBN: How have sales been to this point and what kind of prices you are getting for these homes?
IANNUCCILLI: Sales at this point total 31 of the 40 lots available in phase 1. Activity has vacillated as I described from 2009 to 2011 with a consistent increase each year. At this time, we have seven homes under construction, two more that will begin in the next 30 days. Homes are selling at a low of $380,000 to a high of $500,000.
PBN: What type of buyer is attracted to these homes?
IANNUCCILLI: We have been attracting Gen-Xers between 32 and 42, many employed in Massachusetts and on Aquidneck Island. Most of the families have young children. They are attracted to the large yards and the 3-4 bedroom, 2-story colonial designs.
PBN: Do you think the model that Campanelli used for this development could spread and be used by other developers?
IANNUCCILLI: Sure, it could be implemented. However, keep in mind the strategy that was implemented was facilitated to absorb the improved lots in the development. Revenue generated on homes was minimal. The objective was to jump start the neighborhood and that objective has been accomplished. Lot sales should be completed in phase 1 by spring of 2012, with home construction in the neighborhood likely completed by the close of 2012.
PBN: Aside from Cottrell Farms, what do you see going on in the housing market, any progress?
IANNUCCILLI: With so little new construction having taking place since 2006, consumers are starved for the availability of new housing. With short sales and foreclosures almost dominating our market in Rhode Island, it is refreshing for a buyer to be able to purchase a new home at an excellent value without all the complications of a short sale or a foreclosure. Those complications, as you know, don't exclude the condition of a home purchased that is distressed. So in answer to your question, I think new construction will consistently gain in popularity in the months ahead. Land prices have dropped considerably and builders are working on very slim profit margins. The result is a happy new homeowner.