Reacting to recent interest rate announcements the real estate market is bracing itself for changes stemming from a return to pre-recession economy.

As this affects the real estate market, potentially slowing it, experts are seeing buyers — particularly millennials, who are expected to account for more than 40 percent of sales this year — take a more holistic approach to home values when choosing to buy.

Larger community developments, in particular, stand to factor high in many buyers’ lists.

Developer David Waltemath said gradual rate hikes favor communities that offer amenities such as green spaces and community swimming pools.

Waltemath is the owner of Classic Properties, whose projects include a Good Growth Award-winner with the Santa Maria Golf Community near Baton Rouge in 2003, English Turn in Algiers, The Parks of Plaquemines in Belle Chasse, and more recently, 1,000 acres in Madisonville — Bedico Creek Preserve. “In 2017, Bedico Creek sold more than 90 homes ranging in price from the mid $250,000s to more than $1 million,” reports Waltemath, “ranking it at the top of St. Tammany home sales.”

Though implementation varies, master-planned communities typically involve larger tracts of land. The advantage for buyers is they get more than just a home on a typical sized lot.

Waltemath notes that Classic Properties doesn’t build homes, but rather develops the areas and subdivides it into lots, which are then sold to builders and future homeowners.

“We’re selling these lots for the same price as a developer down the street, who does not have the luxury that we have at Bedico Creek,” Waltemath said. “Home buyers are essentially getting (the amenities) for free.”

The Bedico Creek “luxury” Waltemath refers to includes two community pools with pavilions, a Rod & Paddle Club, playground, an engineered system of paved walking/biking trails, non-motorized boating/fishing, and more than 500 acres of greenspace, parks, lakes and nature preserves with rustic trails winding throughout.

Additionally, 200 acres at Bedico Creek that are technically open to lot development have been saved for future community upgrades. Waltemath said the available space allows the homeowners to continue to build value long after the roughly 900 lots are completed. As an example, he said, the current nine-hole disc golf course could be expanded to 18-holes if the Homeowners Association choses.

Another trend Waltemath said he and others are seeing is that new home buyers are securing lots long before they build. Buying the lot first allows buyers who might have less buying power to secure the ideal location first, and build their home later.

“Lots of people will buy a lot and say, ‘We wanted to buy now, because this lot won’t be here in three years,” Waltemath said. “That’s a great concept for young buyers or those planning retirement options.”

This trend is likely a response to a rising trend of home buyers staying in place. For the past decade, a limited supply of new construction has fueled sales of existing homes. But experts forecast a bullish year of new construction, which will mark a slowdown in the market for existing homes.

Though many buyers are rushing to secure low interest rates, Waltemath said there likely won’t be any sales disruption from the expected rising rates, as long as the increase is steady. Any market anxiety, he said, can be attributed to a generation of new buyers who see three and four percent interest rates as the norm, noting that few, if any, analysts see interest rates spiking to what they were before the recession.

“Interest rates will have an impact, of course, but most older people would say normal interest rates are between six and seven percent,” Waltemath said. “I don’t see anything that will cause the real estate market to freeze — there’s still a big demand out there.”

 

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By Kim Chatelain, NOLA.com | The Times-Picayune
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on June 02, 2016 at 2:44 PM, updated June 02, 2016 at 2:56 PM

There exists a theory in real estate development that the second mouse often gets the cheese. Meaning, the first developer on large projects is prone to stumble, setting the stage for the second one to reap benefits.

Ergo, meet David Waltemath, the second mouse at Bedico Creek, an almost 1,000-acre subdivision that was left for dead in west St. Tammany Parish a decade ago. Waltemath, a third generation developer whose resumé includes English Turn in Algiers, Santa Maria and Green Trails in Baton Rouge and The Estates of Northpark near Covington, made an outside-the-box decision to convert Bedico Creek into what he calls a “conservation community,” and it appears to be paying dividends.

Gone are plans to form yet another golf course community along the lines of Beau Chene, Tchefuncta Club Estates, Money Hill and Covington Country Club. Instead, the land that was previously earmarked for greens and fairways is part of about 550 acres now allocated for parks, green space and a nature preserve, with miles of walking trails accessible only to Bedico Creek residents.

Rather than trying to cram more houses and man-made amenities on the property, Waltemath has filled the sand traps, pulled the pins on the putting surfaces and returned to nature what was once nine holes of fledgling golf course. He said dedicating more than half the property to parks and green space is feasible because he bought the defunct, partially developed Bedico Creek golf community at the bargain price of about $5 million from a group of bankers in 2010.

His redevelopment concept seems to be working. Waltemath says he sold 86 properties in the subdivision in 2015, making it one of the hottest selling spots on the North Shore, if not the New Orleans region. He thinks buyers are attracted to the peacefulness of country-style living within 14 miles of the Lake Pontchartrain Causeway, 3 1/4 miles of Interstate 12 and less than 6 miles from shopping areas of Covington.

A unique sales pitch is used to market Bedico Creek’s residential properties amid the vast greenery that is accessible only to the home owners in the gated subdivision: “Buy a lot, get 500 acres free.”

Land of litigation

Nestled on the western edge of St. Tammany Parish northwest of Madisonville, Bedico Creek was one of the region’s most ballyhooed residential development proposals. In 1996, Covington businessman John Poole proposed more than 1,600 homes and a 27-hole golf course on 988 acres.

Opponents organized under the Save St. Tammany banner came out hard against the development, asserting that a subdivision of that many homes was too dense for the mostly rural area. The group sued in 1997, taking the case all the way to the Louisiana Supreme Court, contending the parish government violated local zoning codes when it rezoned the property.

The courts ruled against Save St. Tammany. But the stiff opposition prompted a revision of the development plan, to 942 homes around an 18-hole golf course, and Save St. Tammany endorsed the scale-down proposal.

Even with a reduced density, Bedico Creek was to be one of the largest residential developments in St. Tammany. The largest is Beau Chene near Mandeville, which sprawls over 1,200 acres with two 18-hole golf courses and 1,500 homes.

But Poole never actually broke ground on the property. Stymied by litigation and market conditions, the Bedico Creek project languished until George McClure, an award-winning Atlanta developer, stepped in and bought it from Poole for $7.35 million in March of 2005. That summer, McClure began work on what was to be a 10-phase, 942-lot, gated golf-course subdivision.

Hurricane Katrina cancelled McClure’s kickoff party, scheduled for early September 2005, but McClure resumed work in 2006. St. Tammany Parish gave his company, Upland Properties, permission to sell 109 homesites in Bedico Creek. Streets were cut, houses began to rise and work on the first nine holes of the golf course neared completion

Soon, however, work came to a screeching halt. On Aug. 10, Marshall Investments sued Upland Properties in federal court, contending the company had defaulted on loans of $16 million and $1.7 million, records show. That lawsuit triggered others from Boh Brothers Construction Co., the main contractor that was hired to build Bedico Creek, and from the subdivision’s early settlers, who were dismayed that the company failed to complete the golf course and other amenities as promised in their purchase agreements.

Before long, what was expected to be a jewel of the North Shore had become a symbol of the national housing crash. Many of Bedico Creek’s houses sat empty, choked by tall weeds around a weathered golf course that was never finished.

While other areas in St. Tammany were buzzing with building activity to accommodate Katrina refugees seeking higher ground, Bedico Creek was dormant. Parish Councilman Marty Dean, whose district includes Bedico Creek, said he remembers driving through the subdivision one day and being amazed at its condition.

“It just looked awful,” Dean said. “There couldn’t have been much more than about 10 (inhabited) houses, and grass everywhere was knee high.”

Getting the cheese

In 2010, Waltemath assumed ownership of the property, saying at the time that he saw an “incredible opportunity at an incredible price.” The price was $5 million for the 988 acres of high and dry property in booming St. Tammany.

Waltemath said he knew right away that changes were in order. The North Shore already had its share of golf courses, many of them struggling to make ends meet.

“Golf was never going to work,” Waltemath said in a recent interview. “So the question became what do we want to do with it?”

After taking a hard look at the property, Waltemath and his associates, namely his children Scott and Kelly, came upon the idea of a “conservation community” that would use the property’s natural assets as an advantage, rather than felling trees for more houses and golfing. “We wanted it to feel like St. Tammany used to be,” he said.

Doing away with the golf course didn’t sit well with some who had moved into the community under the pretense of living on the links. Dean, the Parish Council member, said he recalls several heated meetings to discuss abandoning the course. But things have calmed down considerably at Bedico Creek, he said.

“I’ve not heard the first word or complaint in more than two years,” Dean said. “My impression is that he convinced people that a golf course would lose money.”

Real estate analyst Wade Ragas said many golf course communities are struggling and might eventually have to be repurposed. “We have today a surplus of golf courses in the New Orleans metro area,” he said. “We have a surplus of holes and a slow growth in the number of golfers.”

What emerged from Waltemath’s reforming of the community is a development of 12 small neighborhoods within Bedico Creek, each with its own identity and price range. In sum, the community consists of 930 homesites of various lot sizes with home prices ranging from $250,000 to more than $1 million.

When Waltemath bought the property, he estimates that less than 20 homes were occupied. There are now about 200 homes occupied or under construction and about 300 more lots in various phases of development.

Bedico Creek consists of 173 acres of park space and a conservation area that measures 377 acres. The subdivision’s promotional material says “It’s like having a 500 acre backyard.”

Asked how so much property can be left undeveloped in a financially feasible development, Waltemath says, “The last guy (developer) paid for it.”

Western St. Tammany real estate broker David Holloway said he thinks Waltemath’s unique concept with different pricing points, along with low interest rates and a booming St. Tammany economy, have spelled success for the new version of Bedico Creek. “What they are doing there is working. … It fits the market,” Holloway said.

“It was very smart of him to segregate the neighborhood by price points. He hit the nail on the head with his recipe.”

According to numbers provided by Holloway from the Multiple Listing Service, homes sold in Bedico Creek over the past year ranged in price from $242,900 to $526,000. The price per square foot was from $124 to $161, the average time on the market was 96 days.

Sales in the subdivision have been on a steep climb, rising from 29 in 2014 to 86 last year. Bedico Creek reported only 9 sales in 2013.

Waltemath he hopes that when fully developed the 12 neighborhoods within its boundaries will make Bedico Creek a “multi-generational” community that will have first-time home buyers, top dollar properties and everything in between. He thinks Bedico Creek’s metamorphosis is progressing nicely.

“We’re just hitting our stride,” he said.

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