Following a record first quarter of $19 million in sales, Starwood Custom Homes is buying land throughout the Valley to build 100 homes in 2022.
The Chandler-based custom homebuilder currently has 46 homes under construction.
With a low supply of existing homes on the market and pent-up demand, Jake and Josh Simonton are doing everything they can to keep up with incoming calls.
With 35 employees, the co-founders launched Nextstar Homes division last year to focus on building spec production homes ranging between 1,500 and 3,000 square feet and priced between $400,000 and $800,000, a price point where they’re seeing more demand. Their traditional Starwood custom homes range from 4,000 to 15,000 square feet and sell for between $1 million and $5 million.
“There’s a huge need in the marketplace,” said Josh Simonton, who serves as managing member of Starwood Custom Homes. “We looked at this niche and we felt with our expertise in custom homes, we could bring custom home quality to everybody.”
The Simonton brothers are on track to close on 50 Next Star homes this year and are acquiring land to sell about 100 next year.
“We have a team of five looking for land,” Josh said.
Those land parcels for the Nextstar homes are on the outskirts of town, such as Queen Creek, Buckeye, Wittmann and Rio Verde.
“Jake and myself pay cash for all the land, and we have construction credit lines for the homes that go vertical,” Josh said.
While the Simonton brothers have been building custom homes since starting Starwood Custom Homes in 2012, they had teamed up before that in 2008 to try their hand in the fix-and-flip industry.
Within four years they had bought, renovated and sold more than 900 homes in the Valley.
“We had so much fun working together we said let’s continue this on and move forward,” said Jake Simonton, who serves as CEO of Starwood Custom Homes.
In all their years of working together, they haven’t had one argument or disagreement, he said.
Half of their custom home customers are paying in cash, with many coming in from out of state.
“We expect 2021 to be an absolute banner year for Starwood and Nextstar and the homebuilding industry,” Josh said. “We think it will remain strong in 2022 and potentially 2023.”
While certain things could cause a snag in the growth market — such as rising interest rates and a disruption in the supply chain — Josh said he sees the market staying hot for a number of years.
“Builders will do their best to meet that demand,” he said.
Jim Daniel, president of RL Brown Housing Reports, said the custom home lot activity has been very strong in the first quarter of 2021 across metro Phoenix.
His research shows 2,619 lots or parcels that would accommodate a custom home being purchased so far this year for a total of $457 million.
Dan Gonen, luxury home specialist at RE/MAX Excalibur in Scottsdale, said homebuyers will favor builders who emphasize quality and value, especially in this hot market.
“High standards are a proven way to build customer loyalty and repeat business,” Gonen said. “It’s refreshing in today’s hot market to see a builder who can provide high-end finishes and choices at a good price.”
Phoenix Business Journal