Tennessee: Economy pinches large developments

Home sales have slowed and new building has been almost nonexistent at large developments in Southeast Tennessee and North Georgia, builders and developers said.

Large developments like Fieldstone Farms, approved for 450 homes in Rock Spring, Ga., and the planned 1,000-home Rarity Club at Nickajack Lake in Marion County, Tenn., have an impact beyond the gates of the communities they create, economists said.

But opinions vary on how the weakened national economy affects potential buyers in these large developments.

“Nobody’s immune,” said Mark Vitner, senior economist for Wachovia Corp. in Charlotte, N.C. “Someone who’s bought a $500,000 home is probably more in tune with the stock market, and they see how Fannie Mae and Freddie Mac are doing. Folks buying $500,000 houses are not immune.”

But a local credit counseling advocate disagreed.

Charles Hixon, director of Consumer Credit Counseling Service of Chattanooga, said well-off buyers don’t have to seek “creative financing” through questionable loans.

“They can do what they want to do,” he said. “If they’ve already made their money, they’re not concerned.”

TALE OF DEVELOPMENTS

Mike Ross, president of Rarity Communities, said the economy has not affected sales at Rarity’s older communities like Rarity Bay and Rarity Pointe in Loudon County. The newest developments in Southeast Tennessee — Rarity Club near Jasper and Rarity Rivers in Meigs County — are still in their infancy, he said.

Once completed, both developments will feature golf courses, clubhouses and other amenities, Mr. Ross said. Prices of lots range from $300,000 to $500,000.

More than 100 lots were offered to buyers during the launch 18 months ago of the Marion County development, Rarity officials said. The sales on 56 properties have closed, nine of them this year, property records show.

At Rarity Rivers, Mr. Ross said 80 to 100 lots will go on sale Aug. 1 and Aug. 2. He said that launch could be a good gauge of the buying power of the clients targeted by Rarity Communities marketing.

“We’ll get a good feeling at the first of August,” he said.

One house is under construction at Rarity Club, a showcase home being built by a developer to sell, said Rarity spokeswoman Lacey Smithson. She said one house is in the design stages, but no other property buyers have expressed intentions of building right away.

Ed Smith, a developer of Fieldstone Farms in Walker County, Ga., said sales have slowed at Fieldstone, which when completed will be the largest residential development in the county.

But those houses sell for less than their Rarity counterparts. Patio homes start at $130,000 and single-family houses start at $175,000, Mr. Smith said. About 120 houses and condominiums have been built in the Fieldstone and 70 percent have sold, he said.

Mr. Smith said he built three patio houses within the last few months and two have sold. But other developers are waiting, he said. “The builders are just not building there right now.”

Anthony Foskey of Foskey Construction in Ringgold, Ga., said he built 15 houses in Fieldstone Farms and has one lot remaining. He said many builders have started leasing properties because the homes were not selling.

“Luckily, we got out when we could,” he said. “That tells you something, if people aren’t building.”

BUYERS REACTING

Emily Lasater, a real estate agent with Crye-Leike Realtors, was at Fieldstone Farms recently to show a client some houses.

She said it is a buyer’s market. “The most important thing is the price,” she said.

Her client, Elaine Kemper, of Ooltewah, strolled through a patio house, looking at the amenities. She said she had looked at 10 houses before coming to Fieldstone Farms.

“I’m more specific on my price range,” Ms. Kemper said, noting she wanted a house for less than $140,000.

But owners of Rarity Club lots interviewed for this report said generally the economy has not affected their plans to build.

Barry Patterson, of Ooltewah, said he bought a lot a year ago for his retirement home, and the economy has had no effect.

“If we were ready to do it, that wouldn’t hold us back,” Mr. Patterson said.

Tom Dixson, of Bonita Springs, Fla., said he and his wife, Rose, will move to Chattanooga in August and hope to start building their Rarity Club home within a year.

His biggest concern had been whether the couple could sell their home in southwestern Florida, he said, but now it is whether anyone else will build soon at Rarity Club so they don’t end up living there alone.

“Now that we have closed on the sale, we’re renting in Chattanooga and more or less waiting to see how we like living (in Tennessee) and how things play out for the remainder of the year,” Mr. Dixson said.

He said the recent decision by Volkswagen to come to Chattanooga makes them feel they made the right decision.

“We remain optimistic that we’ll soon end up living (at Rarity Club) and taking an active part in what promises to be a vibrant, thriving community,” he said.