I am not happy with this move but it does suggest that homebuilders are starting to be in an expansionary mood.
Pulte moves into the Seattle area
By Sylvia Wieland Nogaki
Special to The Seattle Times
One of the nation's largest homebuilders is sweeping into the Seattle area, giving the slack, local housing market a vote of confidence.
Michigan-based PulteGroup recently announced the purchase of property at Issaquah Highlands to develop 70 town houses, creating a new neighborhood called Sunset Walk, adjacent to Sunset Park and the planned High Street retail.
That comes on the heels of an even larger acquisition of about 600 undeveloped lots in Snoqualmie Ridge II and property in three other suburban developments — Redmond Ridge East, Arbors in Maple Valley and Glenshire in Redmond.
This is a sign that Pulte believes the region's housing market is stabilizing and has growth potential, says George Rolfe, director of the Runstad Center for Real Estate Studies at the University of Washington.
And the impact of the purchases?
"That immediately makes them tops, a major player right off the bat."
Pulte bought the properties for a reported total of around $58 million. Issaquah Highlands land was sold by Port Blakely Communities. The other properties were owned by the Murray Franklyn Family of Companies and a Murray Franklyn-Quadrant Homes joint venture. Quadrant is the home-building unit of Weyerhaeuser.
Sales of finished houses in Redmond Ridge will begin in late March or April, and sales in Snoqualmie Ridge will also begin in spring, says Pulte spokeswoman Jacque Petroulakis.
"This is definitely an opportunity for Pulte Homes to enter the Seattle market with the purchase of these ... distinct community locations," she said. "We believe there's a great opportunity for diverse offerings" — perhaps including planned communities for senior adults built by Pulte brand Del Webb.
"Pulte Homes is one of the nation's premiere development and homebuilding companies, and we welcome their presence in these community," says George Reece, president of the Murray Franklyn Family of Companies.
When a national homebuilder of Pulte's size goes on a buying spree here, that's significant, says the UW's Rolfe. Historically, the Seattle market has been dominated by independent, local homebuilders.
National builders of Pulte's size — Rolfe calls them "volume builders" — have not been able to find large enough parcels of land to make their entry into the market worthwhile.
The economic downturn, however, made local land available in the quantities and at the price that a large volume homebuilder needs.
And it made it available, says Rolfe, in an attractive market — one consistently in the nation's top 20 housing markets, with a generally sound economy and a historically strong housing market.
To those making decisions at Pulte, which has tended to focus more on the now-beleaguered Sunbelt, "Seattle's got to look good," Rolfe said.
In addition, volume homebuilders faced another obstacle. Their business plan was to build nearly identical homes in every market — a practice that doesn't fit the Seattle market, where many buyers seek unique styles and amenities, such as old-style homes with modern features.
Pulte says it is well aware of the differences that set individual communities apart. It acquired familiarity with the local area and its preferences with its 2009 purchase of Centex Homes, which operated in this area for many years.
The new company, PulteGroup, has been looking for the right location and time to expand its brands locally, according to John Ochsner, company division president for PulteGroup Northwest.
"This transaction brings together builders known for quality communities and construction in several very desirable locations," says Ochsner.
The 2009 purchase of Centex smoothed Pulte's entrance into the market by providing contacts with local municipalities and contractors and knowledge of concerns for features like energy efficiency, says Petroulakis.
"This probably could not have happened had Centex not had a 30-year presence in the Seattle market ... ," she says.
Meanwhile, Quadrant and Murray Franklyn will still be major players at Snoqualmie Ridge.
"Quadrant Homes will continue to build homes in the community and we will retain ownership and the lead developer role ... with our partner Murray Homes in the commercial/retail parcels yet to be developed there," said David Dorothy, Quadrant vice president and general manager of Snoqualmie Ridge.
As a publicly traded company, Pulte has access to lower-cost capital than independent homebuilders, thanks to its ability to raise capital on the market rather than from banks.
The mayor of Snoqualmie, Matt Larson, said he is pleased that his city will be sitting down with Pulte.
While dealing with the parcels' previous owner — Quadrant and Murray Franklyn — was "phenomenal," the companies were in a "wait-and-see mode" toward developing Snoqualmie Ridge II, Larson said.
That's important to the city Snoqualmie — whose population of just under 10,000 is now 84 percent Snoqualmie Ridge residents — given the amenities the original developers had agreed to provide. Those included a football field, a soccer field and $4 million community center that was 75 percent developer-funded. Pulte has accepted responsibility for all amenities in the original agreement.
"I think as a whole it's a net positive for the city," says Larson. "PulteGroup comes in as one of the few ... homebuilders still in a fairly strong financial position."
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