In-Town Advantage

When Michael Ray and Jay MacDowell, partners in Atlanta-based The Housing Group, built their first neighborhood in East Atlanta in 1999, they were banking on a vision of what the in-town community could be. They envisioned a vibrant village with funky boutiques and a hopping nightlife in place of the rows of boarded-up storefronts with burglar bars. It took more than a little faith to picture East Atlanta that way, and a lot of guts to build houses there.

“It was pretty rough then,” Ray recalls. “We had to buy the crack house across the street from the model.”

Those days are long gone, and the partners' foresight has proved accurate. East Atlanta is emerging as a desirable in-town community, well inside the I-285 loop that circles the Georgia capital and represents everything Atlantans hate about the region's traffic. The funky boutiques and hopping nightlife exist now, along with restaurants, grocery stores, major retailers, and banks.

“It's a cool place to live,” says Benita Carswell, CEO at Atlanta-based Bo Bridgeport Brokers, which handles sales for The Housing Group. “It's a village that comes to life at nighttime. It's a big mix of young, old, gay, straight—there's lots of diversity.”

IN TOWN AND IN DEMAND: Eastside Walk is located in East Atlanta, an emerging neighborhood just minutes from downtown Atlanta. The four-bedroom Brantley, pictured, is the neighborhood's best-selling plan.

Credit: Rick Newby/The Icehouse

Close to downtown jobs and cultural venues, the Atlanta Braves' Turner Field, Emory University, and Atlanta's international airport, East Atlanta appeals both to first-time move-up city dwellers who are ready to step up from a condo into a single-family home, and to the road-weary suburbanites who are fed up with the daily commuting gauntlet.

The Housing Group is pretty fed up with the suburbs too, Ray says. After years of slugging it out against national builders and taking a beating on margins, the builder has staked its future on the gentrification of the city's once-downtrodden neighborhoods.

“We're not a Buckhead-Midtown builder,” Ray says, referring to two of Atlanta's poshest areas. “I hate to say we're down in the 'hood, but here we are.”

That's not to imply that East Atlanta is in a ghetto, but it's definitely a neighborhood that's in transition. Even with the improvements that have already happened, it's still an area that's rough around the edges. Much like doing presales, builders here need to be able to appeal to their buyers' sense of being pioneers.

In selling the in-town and emerging market, sales agents have to sell the area, because people buy a neighborhood before they buy a home, Carswell says.

“Part of our slogan is ‘A neighborhood to suit your heart, a home to suit your lifestyle,' ” she says. “As you go through inner cities, there are different flavors [to different neighborhoods]. You have to paint the picture and tell the story of what's happening, because oftentimes you don't see it right there. There may be many improvements cities have passed that are in the works.

“Real estate companies often are afraid of very, very urban markets. It's just never bothered us. We see what the neighborhood is going to become, not what it is now. We're selling dreams to people.”

And it's working. Eastside Walk, The Housing Group's newest East Atlanta community, currently has no standing inventory. While other builders are slashing prices and piling on incentives, The Housing Group recently raised prices at Eastside Walk by $10,000 because of the demand. Since opening, it's had the second-highest sales of nine East Atlanta new-home communities with comparable square footages.

Ray attributes that demand to several factors. There's the location, of course, and the fact that Eastside Walk is East Atlanta's only new-home community with a pool. Floor plans are designed for socializing without feeling cramped. Then there's the price—a base price of $265,500 to $319,900 for homes ranging from 1,800 to 2,512 square feet. And that includes such standard features as hardwood floors, coffered ceilings in the great rooms, granite countertops, stainless steel appliances, tile backsplashes in the kitchen, and tile in the baths. With the most popular features included in the base price, buyers don't need to tack on many options. That helps when they're talking to a lender about financing.

STANDARD UPGRADES: The Housing Group put the money saved by value-engineering its plans into features that resonate with buyers. In the kitchen, granite countertops, tile backsplashes, and stainless steel appliances all come standard.

Credit: Rick Newby/The Icehouse

The best-selling plan, the 2,512-square-foot Brantley, is a four-bedroom model that sells for $319,900, or about $127 a square foot on a concrete-slab foundation. “In this market, that's a great value,” Ray says. “The average here is $150 to $200 a square foot.”

The Housing Group has kept its prices affordable for the market through several strategic moves. The land was purchased from the Housing Authority of DeKalb County, which had completed 34 homes in the first phase of an affordable-housing project when it decided to get out of the home building business and sold its remaining 127 lots to The Housing Group.

Ray and MacDowell changed the name of the neighborhood from Sugar Mill Creek to Eastside Walk, in part to eliminate any perception that their homes also would be subsidized housing (the first phase completed the housing authority's required number of affordable homes; the houses in Eastside Walk are all being sold at market rates), and also to tie in to another of its East Atlanta neighborhoods, Parkside Walk. With the name change came a new, upgraded entryway, beefed-up landscaping, and five Craftsman-style floor plans that respond to the lifestyles of urban buyers. That means open areas geared to entertaining, low- or no-maintenance materials, and upscale finishes.

The floor plans are pared-down versions of the Parkside Walk plans, which are priced in the high $300s to mid-$400s. While the two neighborhoods complement each other, Eastside Walk has much smaller porches, no second-floor porches, simpler rooflines, and less detailing. The smaller porches alone save $8,000 to $10,000 per house.

“We did the plans in a big box,” says architect David Doran of Dacula, Ga.–based Classical Concepts. “We kept the inside open so it's economical and easy to build and kept the roof plan shallow so it could be value-engineered. Many houses in Atlanta have very steep roof pitches.” The builder also switched from wood to vinyl windows, which lowered costs measurably.

Another reason The Housing Group has been able to hold the line on pricing is that it has completely revamped its approach to sales and marketing. The builder hired a public relations firm to help increase its visibility in the city and dumped the traditional newspaper ads in favor of more affordable online advertising.

Opening up the weekly real estate section and not seeing an ad for its communities was tough initially, Ray says, but with rising newspaper advertising costs, dwindling readership, and a slow housing market, it just didn't make financial sense to sink big dollars into the paper every week.

“Some builders are spending $25,000 to $40,000 a week [on advertising],” he says. “You need a lot of inventory to justify that.”

The Housing Group also revamped its Web site to appeal to Net-savvy buyers and switched from an in-house sales staff to contracting with Bo Bridgeport Brokers, which specializes in new-home sales in emerging urban communities and is adept at Web marketing.

“Bo Bridgeport built their business on their Web community; we were weak in that area,” Ray explains. “A small niche builder can compete with the giants of the industry with Web advertising.”

Three months after upgrading its site and shifting its ad budget to the Web, The Housing Group saw its Web site traffic increase from 191 unique visitors per month to 2,746.

The builder's real estate co-op agency business has picked up as well, Ray says, because agents feel more at ease working with other agents than with a sales agent employed by the builder. Carswell agrees, saying her agency works hard to be an active part of the Realtor community.

“It goes back to the basic principle of people [doing] business with people they like and trust,” she says. “Most Realtors will trust other Realtors, often more than they're going to trust an in-house agent. [Builders] blew off the Realtors during the housing boom.”

Finding buyers and closing sales require a partnership these days, Carswell adds. Agents need to be out every week getting the temperature of the market, talking to other agents about what they're seeing and what buyers are asking for.

COMPACT CHARACTER: The Housing Group designed cozy front porches, which offer inviting entry points without incurring large amounts of additional cost.

Credit: Rick Newby/The Icehouse

“The more people you deal with, the more spheres of influence you have,” she says. “You can't [afford to] miss a buyer anywhere you might find one.”