Johnson Farm
Builder: Desert View Homes â–ş Headquarters: El Paso, Texas â–ş 2017 BUILDER 100 Ranking: 54 â–ş 2016 BUILDER 100 Ranking: 67 â–ş Percentage Change in Closings: 42%
Desert View Homes
Johnson Farm
â–ş Location: Fredrick, Colo.
â–ş Year Opened: 2015
â–ş Homes Sold 2016: 62
â–ş Average Sales Price: $291,000
â–ş Total Units: 98
â–ş Units Occupied: 98
â–ş Sales per Month: 6
Phoenix-based Desert View Homes (which goes by Horizon View Homes in Northern Colorado) knows what it is and, more important, what it isn’t. It is not a big builder and, because of that, Randy O’Leary, Desert View’s CEO, tries to stay out of the way of the publics.
“The market we have gone after is one that has buyers willing to drive a little farther to afford a home,” he says.
That showed up in closings at the builder’s 98-home Johnson Farm project, 30 miles outside of Denver. “Johnson Farm is in proximity to Denver, but at a price point … cheaper than the Denver market,” O’Leary says. “It’s probably a 15-minute drive but roughly $80,000 less. It was just a great little bedroom community.”
Desert View started off selling homes at $290,000, but by last year prices were up to $310,000 to $315,000 for its homes, which targeted move-up buyers. “If you pooled the Denver market, you will see people starting at $400,000,” O’Leary says.
John Covert, Metrostudy’s senior director for the West region, agrees that Denver’s escalating prices helped push first-time and entry-level buyers into Desert View’s arms.
“It was the right spot, and they got lots for relatively cheap,” he says. “It was a project that was dormant and it wound up being in the path of growth.”
If the market turns, there are risks with moving farther away from employment centers. But at the right point in the cycle, which 2016 turned out to be, a builder could stimulate volume by offering a much more affordable home.
“The affordability comes from several areas like lots costs, fees, and trades,” O’Leary says. “The lot costs could end up saving $30,000 to $40,000, with another $10,000 savings thanks to the smaller fees for water and sewer in these types of communities.”
Desert View also took a creative approach to Denver’s labor shortage, which helped it maintain affordability at Johnson Farms.
“We pulled a lot of our subcontractors from Colorado Springs and brought them up there,” O’Leary explains. “There are real labor issues. Those guys who had been with us for years in the Colorado Springs market came up and also provided us a great opportunity to save a few dollars.”
In the end, Desert View’s strategy worked. Last year, Johnson Farms sold 62 homes.
“What we were trying to accomplish in that community was a price point,” O’Leary says. “Being a small builder, it’s easy for us to get two or three architects together and get everybody to rally develop floor plans specific for the community. At the end of the day, it was about price.”
