Hovnanian seeks to build up South Florida
BOCA RATON — Homebuilder Hovnanian Enterprises of New Jersey is no stranger to the Florida market, having been among the first to build “entrylevel” condos for first-time buyers in the 1970s. Now, the company is looking to expand its presence around the state, in the hopes it will become one of the company’s top markets in the United States.
As if to emphasize his objective, chairman CEO Ara Hovnanian arranged for his company’s annual shareholders meeting to take place in Boca Raton this week. And the Board of Directors got a tour of one of Hovnanian’s leading projects, the upscale K. Hovnanian’s Four Seasons at Parkland, a community of single-family homes for buyers age 55 and older.
For nearly 60 years, Hovnanian Enterprises has built condos, townhomes and single-home communities in the Northeast, West and South. After a severe business downdraft that Hovnanian admits was the product of overaggressive expansion in 2004 and 2005, he said the company has regained financial strength to grow its footprints in Florida and elsewhere. Currently, California and Texas are its top markets.
“I’d like to see Florida as one of our top markets as well,” Hovnanian said.
The goal is no small order. Rivals and industry analysts note that in South Florida in particular, labor and land costs are high and land is in short supply. The region is filled with other developers, including Lennar, Pulte Homes, D.R. Horton and Minto.
“It is a competitive market,” said Brent Baker, the PulteGroup’s Southeast Florida division president. “There is a scarcity of land here. Between Broward and Palm Beach counties, it’s not easy for any builder due to that scarcity.”
Pulte focuses on converting golf courses into residential sites. This past weekend, for example, the company opened for sale 130 homes on the Boca Lago Golf Course.
Jack McCabe, a longtime housing industry analyst based in Deerfield Beach, acknowledged that Hovnanian’s expanded Florida play makes sense if it wants to grow.
“If you’re looking to be in the best markets for the next 20 years, you have to look at Florida and Texas,” he said. “You definitely want a presence in Florida. You can’t have any national reputation or visibility unless you’re in Florida.”
Hovnanian is focused on would-be buyers migrating south from northern states where state and city income taxes are no longer deductible under the new federal tax law. Hovnanian sees the company playing the “infill” game, where older buildings are razed in urban areas to make way for new development.
He thinks the population demographics will prove up his Florida strategy, and he may well be right.
According to a recent forecast from Cushman & Wakefield, the real estate services firm, all three of South Florida’s counties can count on more growth in 2018. The firm sees Broward’s population rising by 1.8 percent, from 1.89 million to 1.98 million year over year. Palm Beach County’s population is expected to rise by 2.8 percent to 1.52 million, while Miami-Dade’s would go up by 1.4 percent to 2.8 million.
Hovnanian’s projects seem to be well-received. It has nine single-family and townhome projects from Jupiter to Davie, with units priced between the low $300,000s to slightly more than $1 million.