Million dollar maybe

Like most others in his field, real estate executive David Hunihan knows the real estate market will eventually come back down.

When the decline will start — and how bad it will be -- no one knows. But that hasn't stopped the operations manager at Emerald Homes from making a major investment in a Hillsborough County community, with no guarantees a buyer will come along. The investment includes building three houses above the $1 million price range.

Getting houses out of the ground, even without advanced sales, could help Emerald solidify its growing market share. That's one of several reasons the company is high on spec building.

“There isn't a large inventory of luxury homes in our market, but there's still considerable demand for it,” Hunihan says. “We get people all the time who are relocating, and want to have a house now. You can't do that if you have to plan and build it first, and this gives us an advantage in attracting these types of buyers.”

The three homes, in Stonelake Ranch, a 685-acre community on Lake Thonotosassa, range from 4,000 square feet to a little more than 5,000 square feet. The largest is a two-story model home with five bedrooms, seven bathrooms and twin two-car garages. The listing price is $1.7 million.

Of the smaller houses, a three-bedroom is priced at $1.2 million, while a four-bedroom lists for $1.3 million.

Another strategic reason for the spec move is a see-it-buy-it rationale. “The fact is, no matter how you slice it, most people want to see something before they buy it,” says Hunihan. The longtime industry executive oversaw sales at one of the more prolific homebuilders in the region, Lakewood Ranch-based Neal Communities, for five years before he joined Emerald in June 2014.

“There are a select few people who can actually visualize everything a home has to offer before it's built, and then be happy with what's built,” he adds. “You can take any product — a home, car or even clothing -- and people want to try it on. They want to see how it feels. They want to know how it looks. Building that model home helps paint that picture a lot better, letting people see and touch exactly what they're going to get.”

Spec building has been around for at least the past year at the lower end of the housing spectrum. But the capital outlay needed to build in the million-dollar range is staggering for most builders. For builders who still feel the burn from the last housing market crash, it's an even tougher investment.

Yet, it's a confident gamble for Emerald. Not only are many buyers looking to relocate for jobs, but retirees continue to migrate into Florida.

That shows in the data. Luxury home sales of more than $1 million jumped 21% in Hillsborough in the first quarter, and 41% in Pinellas County, according to Smith & Associates Real Estate. Sales volume for that real estate company alone topped $56 million for the quarter, averaging $1.7 million a sale.

Emerald has strong backing from its parent, D.R. Horton, and an expanding presence in six communities between Pasco and Sarasota counties. Emerald has at least 20 lots available at Stonelake, in a rural part of Hillsborough between Temple Terrace and Plant City.

These buyers want more than big houses, Hunihan says. They want land, too. And Stonelake is one of a few to offer both, with the smallest lots boasting 1.5 acres.

“Urban cores are popular right now — especially with millennials — but it won't always be like that,” Hunihan says. “Once they start having kids, and those kids get older, they'll realize how much they want to have a yard, a place to throw around the ball, and a nice respite outside the busy city life.”

Follow Michael Hinman on Twitter @BizTampaBay