Orleans tailoring homes for move-up buyers

More than two years after emerging from bankruptcy, Orleans Homebuilders Inc. is targeting move-up buyers with boutique communities and floor plans that feature a new take on the master suite.

The Bensalem-based company is building 63 townhouses at its Yardley Walk on North Main Street in Yardley, with options for a first-floor master suite or dual master suites, said John Evans, North Division president.

The high-end project caters to multigenerational families interested in a central home, Evans said.

Deer Hollow, a community of 30 single-family homes on North Wales Road in Blue Bell, also will have first-floor and dual-master floor plans available. A home association will cover lawn care and snow removal, a potential lure for empty-nesters looking to downsize.

Orleans, which went private after emerging from bankruptcy in February 2011, is following the same pattern as public homebuilding companies in focusing on the move-up market, said Drew Reading, a Bloomberg Industries analyst who covers the sector.

"Targeting this group helps drive pricing and, ultimately, profitability," Reading said.

Prices for Deer Hollow will start in the $500,000 range, and Yardley Walk homes will have a base price of about $650,000, Evans said.

Construction of two boutique-style communities, the 20-home Main Street Estates in Moorestown at Oldershaw Avenue and the 18-home Maple Brook Estates near Limekiln Pike and Lower State Road in North Wales, will begin in November, he said.

Smaller communities, typically upscale, do well in the move-up market by attracting buyers interested in exclusivity, said Dana Roos-Turnbull, a board member of the Home Builders Association of Chester and Delaware Counties.

Homes in Orleans' Moorestown community will start at about $700,000, Evans said; prices for Maple Brook Estates' properties, about $550,000.

Seventy-five to 150 homes is a more typical community, but the opportunity to grow in these locations fit Orleans' long-term strategy, said Lee Darnold, executive vice president of operations.

Reading noted, "The move-up market as a whole is doing significantly better than the first-time market."

As the housing market strengthens and prices of resales increase, more people are interested in buying newly constructed houses, Roos-Turnbull said.

Nationwide, new-home sales were up 7.9 percent in August from the previous month and rose 12.6 percent from August 2012 levels, according to Census Bureau data.

Orleans is positioning itself for success, but it still must overcome the stigma associated with bankruptcy. "One of their missions will be to make people understand they are a new company," Roos-Turnbull said.

Evans, who joined Orleans in May 2012, agreed.

"We are establishing the new Orleans brand," he said. "We have the same name, but we are a new company."

As Orleans came out of reorganization, cheaper land costs spurred expansion in Illinois and in North and South Carolina. Yet, investment is tilting back to this region.

"The North Division is about 60 percent of our capital investment over the next few years," Darnold said. He anticipates about 400 more lots in Bucks, Chester and Delaware Counties and Ocean County, N.J., to become available within the next 18 months.

With a more clearly defined target buyer, company executives expect growth to continue despite recent results. Revenue dipped 5 percent, to $192 million, in the fiscal year ending June 30, compared with the $202 million collected the previous year, according to company data. But Orleans projects gross income to surpass $225 million in the year ending next June.

Even though revenue is well below the $985 million posted in June 2006, during the height of the housing boom, Evans and Darnold say Orleans is on a succcessful track.

Unlike its pre-bankruptcy years, Orleans no longer needs to keep score with public home builders.

"When you are a public builder, you are expected to flow with the pack," Darnold said. "We can have a little more patience."