The developer of a planned Wellesley subdivision of a dozen single-family homes has told town officials that he is now considering a condominium complex for the property instead.
Rising costs have turned the project with a “slim profit margin” into one that is not economically viable, Peter D. Crabtree, Northland Residential Corp. vice president for acquisitions and development, told the town in a letter last month.
Instead, the Concord-based developer is considering 44 condo units in a town house and duplex style for the 12-acre property at 135 Great Plain Ave., for which it paid $6.5 million in December 2014.
“The new community will create a diversity of housing that is much needed in Wellesley,” Crabtree wrote.
The project would be built under the state’s Chapter 40B affordable housing law and would include 11 affordable units, according to Wellesley planning director Michael D. Zehner.
The statute requires local zoning appeals boards to approve housing developments under flexible rules if 20 to 25 percent of the units are set aside as affordable. Communities are exempt if at least 10 percent of the housing stock is determined to be affordable.
Only 6.2 percent of Wellesley’s housing inventory is considered affordable, and two developers have proposed projects under Chapter 40B elsewhere in town: 95 rental units on Delanson Circle and 20 units on Worcester Street.
In January, Northland secured town approval to move ahead with 12 single-family homes on the Great Plain Avenue site near the Needham town line.
When the application was filed in 2015, the Wellesley Historical Commission wrote that the property had “retained its natural characteristics for over three centuries” and was considered “historically significant.”
The subdivision plan approved by town officials would have allowed the developer to take down the existing main house and a guest house on the property, but preserved the fieldstone “play house” and stone gate entrance.
The permitting process “resulted in a project that we all believed was acceptable to Northland at the time, and was obviously acceptable to the Planning Board,” Zehner said.
In his letter last month, Crabtree said that higher-than-budgeted construction costs, site work, and other expenses made the project no longer economically viable, either for Northland or for 10 other developers who declined to purchase the permitted project.
Most of the homes under the new condo plan would be designed to meet the needs of older homeowners who wish to downsize but currently lack local alternatives, Crabtree wrote.
Crabtree could not be reached for additional comment. Zehner said the developer will seek a determination of project eligibility from one of the state’s subsidizing agencies.
The high price of housing in Wellesley would make a condo project an attractive option for buyers, said Elaine Bannigan, owner of Pinnacle Residential Properties in Wellesley. “I think there is a market for it, there is no question about it,” she said.
For the first five months of this year, condominiums in Wellesley stayed on the market an average of 48 days, compared with 131 days for single-family homes, according to the Massachusetts Association of Realtors. The median sale price of condos in Wellesley was $743,000 during that same time period, compared with $1,337,500 for single-family homes.
“If there is an affordable home that is a condominium, they are going to get scooped up pretty quickly” in Wellesley, said Paul Yorkis, president of the Massachusetts Association of Realtors.
From January through May, sales prices for single-family homes in Wellesley climbed by more than 10 percent compared with the same period a year ago. But they stayed on the market 30 days longer than those the same period last year.
One issue facing developers of single-family homes in Wellesley, said Bannigan, is a local regulation that includes garage space as part of a single-family home’s living area. The rule was intended to control the proliferation of large “McMansions” in town, she said.
The rule has the effect of limiting the size of new homes and the ability of developers, especially smaller ones, to recoup their costs, she said. “If land was more affordable to builders, homes would be more affordable to consumers,” Bannigan said.
Yorkis said developers of single-family home subdivisions face a complex regulatory environment and can spend at least one-third of their costs on land, permitting, and infrastructure work. Builders need to make enough money from a project to move to the next one, he said.
“When you add those three costs together, you need to make a decision: ‘Am I going to make money?’” Yorkis said.
John Hilliard can be reached at firstname.lastname@example.org.