At Marlboro Ridge, Prices Aren't Coming Down, and Neither Are 'For Sale' Signs
By Anita Huslin
Washington Post Staff Writer
Saturday, November 15, 2008
In the pale, creamy floor-to-ceiling-marble bathroom of the marquee model home at Marlboro Ridge in Prince George's County, two people can sink into the raised tub, sip champagne and soak away their stress.
The master suite's his-and-hers custom closets are worthy of a Georgetown haberdashery, with partitioned drawers for tie stays, cufflinks and other accessories, plus display shelves for her collection of shoes, scarves and bags.
A $50,000 home information data center controls voice messaging services, weather channel access, heating and cooling system monitors, closed-circuit cameras, intercom and buzzer systems. Downstairs, friends can sit at a bar and watch sports on one of 10 flat-screen television, roll a few games in the full-size duckpin alley and take a sauna in the spa.
The economy may be stuck in a quagmire, but the American dream is still for sale. Prince George's County has one of the highest foreclosure rates in the Washington region but maintains its hopes and ambitions for more upscale housing. So how do you sell expensive new houses at a time when few are buying? At Marlboro Ridge, Toll Brothers' new luxury community, for both builder and buyer the issue is price.
Tanya Johnson, who is shopping for a home with her fiance, Hillary Keenan, has long admired Marlboro Ridge's Estates model, with its rotunda dining room and marble master-bathroom suite. But these days, she compares it to another high-end production home, by another builder several miles away. That house has never been lived in and has been foreclosed on by the bank. It sits on three full acres, has a three-car garage and costs $300,000 less than the Toll Brothers top-of-the-line model.
"We came here when Marlboro Ridge first opened," Johnson said. "We like Toll Brothers, and we really loved that house, but we thought about how much all those options would cost. Even with the specials, even with time on our side, this price needs to come down."
Toll Brothers' business is down, but appearances are kept up. Marlboro Ridge, in Upper Marlboro, has an equestrian flavor that is announced by 20 acres of fenced green pastures and an imposing bronze sculpture of a rearing stallion at the entrance. The footprint of a stable and riding center is mapped out, although construction has been postponed.
Given the state of the market, many shoppers expect that Toll Brothers, the nation's largest luxury builder, would have cut base prices at Marlboro Ridge. They're surprised to see that they have not. The starting price for the highest-end model in the top-of-the-line Estates collection is $863,995. Homes in the executive-level Hunt collection start at $634,995. Those in the single-family starter Glen collection begin at $563,995, and the Meadows townhouse base is $364,995.
"We don't lower our base prices," said Wes Hummer, assistant vice president for Toll Brothers' Southern Maryland division, which includes the Marlboro Ridge project.
One of its primary sales strategies in a struggling market has been to offer promotions. In October, there was an open house where buyers could meet design and style maven B. Smith and choose from collections she had created with Toll. Last weekend, the builder offered 50 percent off all options, plus cash allowances buyers could use for whatever -- closing costs, adding a room, moving costs.
Company sales continue to be slow. This week, Toll Brothers reported that its home-building revenue dropped 41 percent year over year in the latest quarter. For the full fiscal year, which ended Oct. 31, revenue declined 32 percent, though the company reports having $1.63 billion in cash, liquidity that is key to being able to make interest payments and fund operations. The company hasn't reported complete results for the year yet, but in the first nine months, it lost $219 million.
Robert I. Toll, the company's chairman and chief executive, has said that the company is now in the third year of the worst housing market since his family started the business in 1967. Visitor traffic and home deposits are at historic lows. Contracts are down nearly 30 percent from last year. And the close of the year is expected to be even worse.
This week, company officials said that more contracts were canceled last quarter than in the previous quarter (30.2 percent vs. 19.4 percent) and that the canceled contracts were for more expensive homes ($785,000 on average vs. $606,000). They predicted that the trend would continue without additional federal assistance to the industry.
Aside from lobbying for government intervention, Toll's strategy has been to dangle the goodies: extra square footage, upgraded kitchens and baths, centralized technology systems. Its model homes are chock full of add-ons.
Incentives "do make a difference, although they have made less of a difference in October than they had made in July, August or September," Toll said this week in a conference call with investors. "We will continue running promotions."
This is bringing potential buyers in. But their checkbooks are remaining in their pockets. Many assume that the longer they wait, the more likely that they will be able to buy for less.
"The basement really has to be spectacular," said Kimberly Brown, who was admiring the three-tiered theater in the lower level of the Hopewell model home. Tricked-out basements are a Toll specialty. The lower level of one in the starter-home line at Marlboro Ridge is decked out like a jazz club. It has brick archways, a stepped-up stage, plush armchairs arranged around a cocktail table and a grotto-like feel. Another is designed as a billiard and game room. A third has a casino theme, with card table, bar and TV lounge.
Toll has been more aggressive than other builders in trying to maintain its list prices, according to analyst Megan McGrath of Barclays Capital Research, and has been successful to the degree that the decline in its average home sales price has been smaller than for other builders.
But to maintain cash flow, builders need to sell. And so Toll, which in the past has rationed promotional offers, has become more generous with enticements. Its models showcase the offerings.
Even before the market began to decline, Toll had planned to load up the Marlboro Ridge models with options. In the Malvern, the premier model in the Estates line, the entrance foyer leads to a two-story dining room rotunda. Upstairs, the marble-clad master bathroom leads into the bedroom with an Asian-style crosshatch of dark wooden beams accenting coffered ceilings.
Jeanette Tolbert is retired, getting married and looking to buy in the next year. She admires the wrought-iron staircase in one model home, its gourmet kitchen and the lounge off the dining room where a baby grand sits next to a bar overlooking the woods.
"What a wonderful place for entertaining," Tolbert said to her friend, Tammy Rogers. "I love it and all, but I'm going to wait for the prices to go down, and then I will buy."
Downstairs, Brian Richardson has brought his family, visiting from Texas, while he looks for a new place. The single consultant works from his 5,000-square-foot house nearby and is looking for a new house, he said, because he would like to have a dedicated home office, which he doesn't have now.
He looked at Marlboro Ridge two years ago when he was getting ready to buy, but the project had just broken ground that spring, and he wanted to move more quickly. He bought elsewhere.
Last weekend's half-off options tempted Richardson. But he has to sell his current place. Toll is offering him help with that, providing a professional "stager" to help make it more appealing to buyers and offering zero closing costs.
"I'd like to live here," Richardson said. "But first things first."
Down the street, Toni Edwards browsed the model townhouses. A map in a glass-topped case shows the neighborhood layout, with little Monopoly-like houses that show their status. Most are yellow -- sold. But there are a half dozen lots still empty in the first phase and a few gold houses. The gold ones are the ones that once had contracts but the contracts fell through.
Edwards, her husband and their young daughter strolled through the plush carpeted models, stepped out onto the walkout patio and watched water splash from a fountain. He liked it. But she wondered aloud whether they really needed to move.
"If something hits us and says, 'We've got to do this,' then maybe," she said, thinking aloud. "But so far, that hasn't happened. Do we really need all this space? I don't know what I'd do with all of this."
Richard Benjamin, sales manager for the Glen line, said that even though the base prices stay the same, options are improving the deals that customers can get.
"The way you see it, it's $625,000," he told two women touring the Richmond model
"But the one across the street is $625,000," said Jeanette Tolbert, referring to a larger model house.
"That doesn't have any of the options you see here," Benjamin explained, noting the all-brick exterior, the custom kitchen with granite countertops and the first-floor solarium. The split staircase features twisted iron railings. At the top of the stairs, a custom library has been created with built-in bookshelves, and the children's bathroom is lined with sparkling glass tiles.
Listening to buyers' feedback, Benjamin has played with the layout of the homes in the line, extending kitchens, adding solariums and bumping out second-floor master-bedroom suites. By and large, the changes don't add a lot to construction costs, but they make the buyers feel they are getting more of what they want, he said.
A new Toll house, one would-be buyer said after touring Marlboro Ridge, remains an aspiration that's just out of reach.
"I feel like I should be able to afford this," said Tammy Laster, a management consultant who lives in Howard County and visited Marlboro Ridge last weekend. "We make good money, and we have good jobs. And we still can't do it."
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