Are housing lotteries becoming normal way to buy? GL Homes holds one in Port St. Lucie

PORT ST. LUCIE — A new residential community to be built here is in such high demand the developer is holding an online lottery for potential homebuyers Friday.

Valencia Walk at Riverland in Tradition has 96 property lots available for purchase, according to a site plan posted on its website.

Developer GL Homes declined to comment or answer any questions about the lottery, pricing, construction timelines and more. However, documents outline the myriad hoops potential homebuyers have to jump through. Even then, nothing is guaranteed.

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Valencia Walk lottery

Valencia Walk, on Southwest Community Boulevard just south of Valencia Cay, is the third 55+ community to be built as a part of the 4,000-acre Riverland, according to its website.

Friday's lottery is the first round of lots to be sold at Valencia Walk, documents show.

Base prices start at $377,900 for a 1,903-square-foot, two-bedroom home, and could reach $809,900 for a 4,481-square-foot, three-bedroom home. Premium options can add up to $20,000 to the cost.

Potential buyers can select any lot and home design, but regardless of the choice, all lottery participants were required to pay a $10,000 deposit to reserve a spot.

The private online lottery will be held via Zoom starting at 9 a.m., documents show. If potential buyers are unable to attend, a representative such as a real estate broker could stand in for them, but needs to complete a registration form in advance.

TCPalm doesn't know how many potential buyers entered the lottery.

The selection order will be chosen at random, documents show. Once established, a sales agent will call potential buyers in order, and they will have five minutes to ask questions, select a lot and a home design.

Then, buyers will have three days to sign a purchase contract and pay 10% of the total purchase price — minus the $10,000 deposit they already paid. The deposit will be refunded to those who do not purchase a home, documents show.

There is a no-investor policy, documents show, meaning buyer must "intend" to purchase the home as their primary residence, but it "does not necessarily need" to be.

Purchase contracts require owners who sell within a year of closing to pay GL Homes 100% of the profit unless the owner experienced a hardship that required the sale.

Construction is estimated to be completed in summer 2023.

Is this normal?

A handful of South Florida developers have used housing lotteries before, but the practice is likely to become the norm as demand continues to increase, said Ryan Greenblatt, a broker for Lang Realty in Boca Raton.

"Now that the demand has far exceeded supply, if you just open a door for a sales office, they'll be bombarded. This is sort of the only way to have order," Greenblatt said.

This isn't the first time GL Homes has hosted a housing lottery. On March 25, the developer had 190 participants vie for one of 75 lots in its Valencia Grand community in Boynton Beach, the Palm Beach Post reported. Another was held in Pasco County in October, according to its website.

Typically, a housing lottery places a limited number of homes in each drawing, Greenblatt said. Developers repeat the process multiple times, increasing prices along the way, before opening up all of the homes to the general public.

It's the fairest solution, Greenblatt said, or else homebuying could turn into a bloody bidding war. More developers are to likely hold housing lotteries until the real estate market cools, he said.

"I think it's a sign of the times," he said. "I don't think it will be permanent."

Catie Wegman is TCPalm's housing and real estate reporter. You can keep up with Catie on Twitter @Catie_Wegman, on Facebook @catiewegman1 and email her catie.wegman@tcpalm.com.

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