HomeTown – Neighborhood Development

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XII PROFITABILITY

HomeTown's land plan allows us to sell four product lines in one Neighborhood. For example, in Phase 2, which we opened this year, we have:

• Entry level Condominium Cottage Living Court homes from $107,000 to $130,000.
• Jump up and move up Condominium Living Court homes from $125,000 to $145,000.
• Alley Garage Fee Simple homes on Main Street from $130,000 to $155,000.
• Living Lane Fee Simple homes from $145,000 to $175,000.

Each of these 4 house types appeals to several target markets. The result is that in a single neighborhood of 124 homes we have at least two homes for almost every target market segment. You can imagine how capital efficient that is.

Instead of 4 phases of 100 homes each scattered throughout the development we have 1 phase of 124 homes under construction. Because most of the models can be built in two or three different house type configurations simply by moving the garages around, we only need 6 models which are in one location with one sales staff and one sales office to market these four product lines.

We have considerably less land development infrastructure.

However, many of the things we do to foster human scale and neighborliness are not found in conventional subdivisions – things like wider sidewalks, safety platforms, neckdowns, gazebo, gathering places, trellises, pavilion, Neighborhood Parks, native prairie, etc. These add cost. Because the Living Lanes are private and safe for pedestrians, we do not need sidewalks there; that's a big savings. However, it costs more to install improvements in confined spaces due to the closeness of houses. The net result is that our land development costs are probably about 10% to 20% less than conventional subdivisions. This gives us a tremendous competitive advantage when you consider all of the lifestyle amenities we include.

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