Homebuilders Buy Land After Three Years of Selling as U.S. Demand Returns

[Purveyor]

Aug. 26 (Bloomberg) -- Signature Properties has been trying since 2005 to sell 4,000 finished lots in its Fiddyment Farm community, a former pasture and pistachio orchard northeast of Sacramento, California.

The developer sold 41 sites in April to Meritage Homes Inc. for $66,000 each, and another 41 in June to Hovnanian Enterprises Inc. for $68,000 apiece. This month, they got their best offer yet -- $103,500 each for 77 sites.

Signature Properties said no.

“We decided to build it out ourselves,” said John Bayless, president of the Sacramento division of Signature Properties, a closely held developer in Pleasanton, California. “Our feeling is, ‘The tide’s turning. Let’s build ‘em.’”

Homebuilders that spent the past three years selling off land and writing down the value of property holdings are scouring markets in Sacramento, Phoenix, Denver and Orlando -- cities synonymous with the real estate bubble -- looking for deals on ready-to-build lots as they prepare for a rebound.

Writedowns and write-offs by 14 of the largest publicly traded homebuilders totaled $28.5 billion since the start of 2006, according to a July 15 report by Fitch Ratings.

Home prices in 20 U.S. cities fell in June at a slower pace than forecast. The S&P/Case-Shiller home-price index declined 15.4 percent from a year earlier, the smallest drop since April 2008, the group said yesterday. The gauge rose from the prior month by the most in four years.

BLOOMBERG: http://www.bloomberg.com/apps/news?pid=20601109&sid=aqTrfIx0BOgs