For first-time homebuyers, 2020 was a big year. Mortgage interest rates were at record lows while most of the country was resigned to the interior of their homes due to a global pandemic. For many renters, the four walls surrounding them started to look sorely lacking. In April 2020, first-time homebuyers rose to comprise 36% of the home buying market share, according to National Association of Realtors data. That dipped to 31% by September, but an overall increase in the number of buyers meant there were more first-time homebuyers in late summer 2020 than there were in May of the same year. Now some luxury homebuilders in the region, which normally cater to a higher-priced demographic, seek to grab a piece of that rookie buyer market. Several builders in the region are increasingly adopting the trend of creating side businesses or modules focused on affordable homes marketed toward first-time or downsizing buyers looking for the newest option at a lower price point. Some builders are already seeing strong results.
One big example is from Riverview-based Homes by Westbay. The firm, investing in affordable new homes through a subsidiary company, did $348 million in revenue in 2020, growing 29.6% from $268.5 million in 2019. Part of that was COVID-19 growth, President Willy Nunn, 55, admits. “There’s no denying that COVID has supercharged suburban homebuilding,” he says.
But a key part of that was Casa Fresca, the company’s affordable home offshoot founded in 2019 that’s already attracted a major investor in New York-based real estate investment firm GTIS Partners. Last summer, GTIS Partners invested $50 million in a joint venture with Casa Fresca for the development and sale of entry-level homes in the Tampa Bay metropolitan area. Both parties committed to building more than 440 homes within three projects, according to a news release.
GTIS’ head of US investments, Rob Vahradian, attributes the decision to the growing demand in the entry-level market.
“The entry-level market segment, especially in Tampa, has been fundamentally strong for some time,” he says in the statement. “For a variety of reasons, Tampa entry-level housing saw increased sales in 2020, which has continued into 2021 despite the impact of COVID-19, and we anticipate this demand to continue as the acute effects of the pandemic subside. We formed this JV with Casa Fresca to help meet this demand.” Casa Fresca’s business shows no signs of slowing down as the pandemic begins to come to an end. In 2020, the company closed on 200 Casa Fresca homes, Nunn says. He expects that number to almost double in 2021.
Nunn and his team at Homes by Westbay had been thinking about building stylish yet affordable homes in the Tampa Bay area long before Casa Fresca’s 2019 founding. But each time they tried, the model seemed off. They had one core problem: They were starting from the level of their standard luxury homes, which now, on average, cost $550,000, and subtracting elements to make them more affordable. That strategy was a mistake, Nunn says. “You really want to start fresh,” Nunn says. “Let’s start from a blank piece of paper and think about how we would design homes that are stylish and affordable.” Casa Fresca homes originally started in the $190,000 range, Nunn says. Today, those homes range from roughly $220,000 to $280,000. The latter will get you a home at about 2,800 square feet. When Casa Fresca first started in September 2019, the company completed a few houses on its own before executives realized the unit was ready to grow — and fast. That’s how the team decided on the idea of partnering with an investor. They felt they had something good going and an idea with a precedent.
‘Sticks and bricks cost the same. It’s all what you pay for your land.’ Tony Crimi, M/I Homes
“Casa Fresca is a very suitable business concept for an institutional investor,” Nunn says. “There are relatively tried-and-true operating principles for entry-level production homebuilding, and so it’s easy to find agreement between the sponsor and the institutional investor on how to operate.
On top of the $50 million GTIS Partners invested in the venture, WestBay invested additional funds, Nunn says. He declines to discloses the specific amount. Despite less than two years in business as Casa Fresca, the company has already built its affordable homes in diverse geographic locations within Hillsborough and Polk counties, from Riverview and Lithia to Lakeland and Odessa. Nunn realizes there’s plenty of competition in the field, both from national giants and smaller, regional and niche custom builders. But one design element that makes Casa Fresca special to Nunn is what he calls the “tasteful application of vibrant color.” Each community is planned to emphasize the streetscape and make each home feel part of a bigger whole. Photos on the Casa Fresca website show homes with pops of teal, orange and gray on the siding. After all, "casa fresca" is Spanish for cool house. “We’re trying to appeal to people that value the little something extra that they get from living in a Casa Fresca home,” Nunn says, “versus the sea of sameness.”
Meet the competition
One of those competitors seeking new homebuyers’ attention — and wallets — is the Sarasota division of Columbus, Ohio-based M/I Homes. The company is building off of the success of its Tampa division, which recently built affordable homes in a Pasco County community, says Tony Crimi, the branch’s vice president of sales and marketing. Crimi says it was a matter of finding the right land for the right cost before the Sarasota division made its move on the affordable market.
“Sticks and bricks cost the same,” Crimi says. “It’s all what you pay for your land.” The company decided to build its affordable properties within a pre-existing development — Trevesta, a Palmetto community near Interstate 75 supplied by a variety of homebuilders. That includes M/I Homes, which already has 27 home sites in progress there. Spurred by its success in the area, the company purchased 250 additional home sites for $11 million, with the express goal of building its new Smart Series properties there.
Permitting is already underway for 20 homes in the company’s new affordable series, and the series’ model is under construction. Crimi says the firm hopes to have homes available for presale by early April and the model completed by mid-May. Homes start at $200,000 and range from 1,500 to 2,000 square feet, depending on floor plan. Floor plans are borrowed from the Tampa division’s project.
In early March, Crimi had a chance to walk through the frame of the series’ model. It was an emotional experience for him because the open plan layout with a den and three bedrooms reminded him so much of his own first home, back in 1985. “It was a great stepping-stone home,” he says. “It allowed us to get into a good home at a good price and allowed us to start a family and save some money.”
Aside from first-time homebuyers, Crimi expects those downsizing or moving from out of state to be a good fit for the community. Trevesta’s location attracts people working as far north as Hillsborough County and as far south as Sarasota County, he says, so there’s a lot of geographic diversity within the neighborhood. Although the company hasn’t pre-sold a single home yet, Crimi is confident this will not be the Sarasota division’s last foray into more affordable homes. Other divisions of M/I Homes in other parts of the country have seen great success with this model. And the company is already under contract on land in North Port, south Sarasota County, to build more of the Smart Series.
One sign of success in the niche comes from evangelist-like customers — people who buy the homes than talk it up to others. Consider area Realtor Katie Trimble, 31. She worked in property management before transitioning to real estate, so she knew a thing or two about looking for the best value and unexpected problems that could arise in a house. When she and her fiance found Casa Fresca, the community was simply supposed to be a starting point, given they were early in their home search. But they fell in love with the property. “You can’t beat it for what it was,” Trimble says.
They toured a few other builder properties, but nothing else compared. The couple went under contract in 2019 and closed in April 2020 on a home in the Triple Creek area of Riverview. They paid $221,100 for their 1,860 square foot residence, Hillsborough County property appraiser records show. Almost a year later, Trimble remains incredibly satisfied with her decision. She enjoys walking around the neighborhood and sitting out on her porch. And she loves the two-story home with its granite countertops and vinyl floors.
She loves her house so much that she talks with potential buyers about the Casa Fresca experience in her day job. “For people who are looking, especially for that first-time homebuyer or anyone who doesn’t want to worry about those little details,” she says, “it’s an amazing product for that.”
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