2 min read July 2023 — In an interview with Invest:, Mike Belmont, president of Minto Communities, discussed the sales growth in the Palm Beach market and highlighted his organization’s commitment to tailored construction. Despite the decrease in foot traffic, the company experienced a 40% increase in home sales, he said.
What developments have been taking place for Minto Communities within the Palm Beach market?
Last year, we had the honor of being included in the John Burns Top 25 master planned communities in the U.S., securing the 21st spot with 550 total sales. The Minto neighborhoods in Westlake achieved 360 home sales. This year, we have already sold 234 homes, which represents a remarkable 40% increase in sales compared to the previous year at the end of June. However, what’s interesting is that our foot traffic, indicating the number of individuals who visit our sales center, has decreased by approximately 26%. Despite this, we are encountering genuine buyers who display a strong interest in purchasing a house. It’s quite astonishing considering we anticipated a more reserved figure of 277 homes sold in our 2023 budget. We adjusted our expectations due to the foreseen rise in interest rates and the escalating costs of new housing caused by disruptions in the supply chain, increased labor expenses and higher material costs.
We exercised caution due to these factors, yet our sales have soared by 40% this year. This impressive growth is not limited to Westlake alone; we are observing similar trends in all our communities across the southern region. Year-over-year, our sales have surged by anywhere from 15% to an astounding 50%. The exceptional performance in the first half of 2023 has been a pleasant surprise.
What is your perspective on the state of the housing market in Palm Beach County?
In terms of the resale market, the limited supply of homes available may be influencing individuals to opt for the purchase of a new home. From my perspective, Westlake is experiencing exceptionally high demand. Every release we make results in swift sales. However, due to production limitations caused by labor and supply chain issues, we still have some construction constraints. While these issues are improving from last year, they have not yet returned to pre-COVID levels. As a result, we continue to limit our monthly sales to regulate the number of homes we have under construction at any given time. We are cautious about selling homes over a year in advance. Currently, buyers can expect their closing to take place within nine to 12 months from the date of purchase. We prefer not to extend our timeline too far into the future, as it becomes more challenging to control costs and manage a backlog without proper discipline. It’s important to note that we do not build homes on speculation; all our construction is tailored to meet specific orders. Cancellations at Westlake are rare, occurring at a rate of less than 2% a year. This compares to the national average of around 20% or more for public builders. We focus on driving qualified traffic of individuals who genuinely desire to be a part of the Westlake community in a new home.
What residential housing trends have you observed over the past year?
As prices in the market have risen, we have made the decision to continue increasing our prices without offering any incentives, discounts or mortgage buy-downs. Some of our competitors in other communities have chosen to provide incentives ranging from $30,000 to $40,000 for move-in-ready homes. In a newly opened community in Palm Beach Gardens, incentives reached an impressive range of $70,000 to $90,000. Fortunately, we have not found it necessary to follow suit. We would rather slow down our sales volume than introduce discounts because it wouldn’t be fair to our existing customers who have already paid a certain price for their homes. We have 350 sold homes in the backlog with a certain value and it wouldn’t be justifiable to offer discounts to new customers.
What global and national trends are you closely monitoring and how might they impact the industry as a whole?
The rise in interest rates, which translates to higher mortgage rates, may potentially cause people to pause at some point. Many individuals have already taken this into consideration. However, we believe people will adjust to the new circumstances if the rates remain below 7%. One of the advantages of Westlake is that we offer a 3% discount to first responders and civil service personnel. For example, on a $400,000 house, this equates to a savings of $12,000. This offering has gained significant popularity and has been in place since day one when we opened in October 2017. Since then, the community has flourished, with over 2,000 homes sold, including the land sold to two other builders. One of these builders has already sold out, making Westlake one of the most vibrant new home communities in Palm Beach County. In 2016, we incorporated the community, becoming the 39th municipality in Palm Beach County. This status allows our residents to have a say in shaping the future of the community, empowering them to make decisions rather than relying solely on the county. This advantage sets us apart and gives us a unique marketing proposition.
How has Minto Communities navigated through the influx of corporate relocations?
It’s quite challenging because Palm Beach County faces significant limitations in terms of available land, making it difficult to accommodate new developments. The costs associated with complying with regulations further compound the problem, making the process even more arduous. Although there have been relocations to the area, the issue of housing hasn’t been adequately addressed. While multifamily apartment complexes have experienced an increase, it’s worth noting that when we received approval from the county, they explicitly prohibited us from including apartments in our community. This restriction seemed illogical. However, by establishing our own city, we have been able to rectify this situation. When the market conditions are right, we will consider the opportunity to provide apartment options, as it eliminates the need for a down payment and increases affordability.
What sets Westlake and Minto Communities apart from other residential real estate firms in the county?
We have been in business for over 45 years in South Florida, building over 32,000 homes. Our reputation as a creative community developer and proficient home builder is well-established. Unlike competitors who rely on land developers to supply finished lots, we buy large tracts of land and handle the entire process ourselves. This results in more efficiencies and allows us to be more competitively priced than most of our competition.
Where do you foresee the residential industry in Palm Beach County heading in the next two to three years?
I firmly believe that we will continue to maintain our position as the premier master-planned community within Palm Beach County. Originally approved for over 4,500 homes, we are now down to our last 1,400. With sales reaching more than 300 homes per year, the community lifespan may be limited to three or four more years. However, we still possess a substantial amount of land due to the low initial density of 1.2 units per acre, which is significantly lower than found in most typical developments. This suggests that there may be opportunities in the future to utilize some of this land for additional housing units.
Are there any legislative developments that you are keeping a close eye on?
The Immigration Bill, Senate Bill 1718, which came into effect on July 1, has sparked a lot of speculation regarding its potential impact on various industries, including construction. This is particularly concerning considering the already tight labor supply. Additionally, we need to closely monitor the fluctuations in interest rates, as they can significantly influence the market. On the bright side, some of the supply chain disruption issues experienced a year ago are gradually improving, although they haven’t been completely resolved. As for international impact, we have not witnessed a substantial influx of international relocations, as our focus primarily revolves around selling to homeowners rather than investors. Thus, our experience in that regard has been limited.
For more information, visit:
