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VOL. 124 | NO. 256 | Thursday, December 31, 2009

Klazmer/Sklar Bullish on C’ville’s Schilling Farms

By Eric Smith

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LOOKING UP: As with most homebuilders, business is slow for Scott Klazmer, left, and Ron Sklar of Klazmer-Sklar Homes. But the duo – whose combined experience totals 50 years – recently bought 12 lots in Schilling Farms Planned Development in Collierville with hopes of the market turning around.
PHOTO BY ERIC SMITH

Scott Klazmer, a principal at the homebuilder Klazmer/Sklar Homes, understands why someone would question the company’s recent purchase of 12 lots in the Schilling Farms Planned Development for $500,000.

Klazmer/Sklar, a Germantown-based company that builds as many as 25 to 30 homes annually during good years, hasn’t started a home in 2009. So Klazmer, whose business partner is Ron Sklar, welcomes the opportunity to explain the ways a small builder is surviving a slump that has yielded the fewest number of new home permits countywide in decades.

One way is buying lots at a good price in a subdivision with huge upside – a subdivision where the company has already built three homes and sees loads of potential for a resurgence once things pick up.

“I’m not saying that Ron and I think the market has improved, but we bought them at a discounted price from what we actually paid for the ones we already owned,” Klazmer said. “We were able to dollar-cost average our lots down from what we originally paid. When things pick up, when we see demand return, we propose to build a very similar product to what we’re building there now. It (demand) is just not there right now.”

‘Solid location’

But when demand does return, Klazmer/Sklar will be ready. The company bought lots 2, 10, 12, 19, 21, 24, 42, 43, 55, 58, 63 and 73 in Schilling Farms PD’s phase 43 from Regions Bank. Five of the homes are on Russell Farms Road, four are on East Tarren Mill Circle and three are on Ostlers Way.

The company, which has sold two homes in the neighborhood and now has one furnished model home for sale at $419,850, is bullish on Collierville, a town that has seen some of the better sales numbers for Shelby County even as the housing market tanked.

“We bought these lots from Regions Bank at a bit of a discounted price thinking it’s still a very solid location,” Klazmer said. “It’s an area where Memphis is growing. Of course it’s Collierville, and it’s close to 385 and it’s close to restaurants and shopping and it’s very convenient.”

Collierville’s 38017 saw 69 sales in November, good enough for second highest in the county (tied with East Central/Poplar Perkins’ 38117 and behind only Cordova North’s 38016 with 104 sales). Collierville’s sales last month averaged $275,500 and totaled $19 million, the latter of which was tops in the county.

Those numbers keep the duo optimistic, a feeling that’s been hard to maintain as the housing market wreaked havoc on builders throughout Shelby County. The numbers, coupled with the recent lot acquisition, also give Klazmer/Sklar an edge over the competition.

“If anyone buys lots in Collierville,” Sklar said, “they’re not buying them cheaper than we did.”

Ready for survival

Some things need to change for the homebuilding business to return. Sure, a few positive trends have emerged like the $8,000 first-time homebuyers tax credit, which recently was extended to April 30 and also expanded to include existing homeowners.

But one inherent problem with the building business, Klazmer said, is that if demand does come screaming back, it’s impossible for builders to replenish the supply quickly. And with sales outpacing starts for the past year, it’s only a matter of time before inventory sinks too low.

“These aren’t like loaves of bread that you bake overnight and they’re there,” he said. “These houses, in this quality range, take six months to build. If I start them today, I’m not going to be able to sell them to you until April or May. It’s a problem. It’s like turning around a battleship.”

But the Klazmer/Sklar battleship is one that appears capable of surviving the rough seas. With a stake in Schilling Farms, whose nearby mixed-use developments bring a healthy dose of office and retail offerings to the area, the company could be in the right place when the time comes.

“We’re just sitting on our hands, keeping our powder dry,” Klazmer said. “We had to rent a few of our new inventory; we’ve still got a few for sale and we’ve lowered our prices to, I would say, highly aggressive prices.

“When demand comes back I’m off and running again and hopefully can survive some of these losses we’ve suffered.”

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 71 233 2,852
MORTGAGES 74 171 1,954
FORECLOSURE NOTICES 0 37 312
BUILDING PERMITS 125 894 6,595
BANKRUPTCIES 34 206 1,183
BUSINESS LICENSES 19 115 606
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0