Thank you from Land Advisors Organization California Division!

LandAdvisorsCA1B2014TotalConsiderationClick on image to enlarge

 

California Division: 2012 Year in Review

LAO-CA Infographic 2012 YIR

Source: Tom Reimers, President, (949) 852-8288 x28

LA – Selling Fast

As the end of 2012 approaches, the Los Angeles infill residential market continues to see increasing momentum in both new home sales and demand for new land development.

Much of the demand for new projects in the Los Angeles basin stems from the steady flow of new home sales at projects throughout the county.  In particular, there are several townhome projects in the San Gabriel Valley including Azusa, Baldwin Park and Covina that have seen absorption rates in the four to six units per month range.  In Northeast Los Angeles, Pulte’s Mosaic, Heyday’s Buzz Court look to be on pace to selling out around the New Year, while Williams Homes Olive Glen project in the South Bay was named the fastest selling community in the southland.

Buyer demand for new attached or detached homes is triggering, both builders and developers, to get more aggressive when it comes to land deals. Many are even considering B and C locations. While there is not a significant supply of developed lots available in the infill markets, our team is beginning to see progressively more tract map and permit applications being processed in many cities. Through our vast database Land Advisors avidly tracks deals that are being processed and approved, allowing us the ability to tailor information to meet any acquisition criteria.  Whether it’s 5, 50 or 200 units you are looking for we can guide you to deals that meet your specific goals and needs.

Buyer Demand has triggered both builders and developers to get more aggressive for land deals.

Related Article:

http://ourweekly.com/los-angeles/olive-glen-called-fastest-selling-new-home-community-southland

Source: Chris Gomez-Ortigoza, Marketing Consultant, (626) 378-9840 x14

Warm Weather and Hot Rents in LA

As we begin to approach the fall, you can bet the weather will cool down but the apartment market will continue its hot streak. The Los Angeles Infill Team has been paying close attention to apartment rental trends and has seen favorable signs for continued rent growth.

Apartment rental rates in Los Angeles continued on their strong path of growth as seen in year-over-year data in the second quarter 2012. Average rents for all types of rental units increased 5.3%. The biggest surprise may be the average YOY growth seen in both two and three bedroom townhome units. Rents in two bedroom townhome units increased an average of 13.8%, while rents in three bedroom townhome units increased 17.2%. Townhome and three bedroom units have seen a large boost in pricing as many families displaced by foreclosure try to find units large enough to accommodate them. Several buyers, including investors and developers, are paying close attention to these statistics and are pushing to purchase properties with the ability to build and rent townhomes then convert them to condominiums as the for-sale market improves. Average occupancy rates have continued to tick upwards and touched 95.5% in Q2 2012 for metro Los Angeles.

These are strong signs keeping the search for apartment land deals atop the list of many builders and developers. The Los Angeles Infill Team at Land Advisors recently transacted on a rental townhome project and has a handful of other apartment deals under contract. Our team is well versed in the local rental market and eager to discuss available and active apartment projects.

For further questions and information, please contact Chris Gomez-Ortigoza, Tim Barden or Richard Byrd at (626) 376-9840.

The following news articles highlight the strength of the rental market in Los Angeles and throughout Southern California.

http://www.nbclosangeles.com/news/local/Rents-on-the-Rise-Across-Southern-California-147394535.html

http://www.zoliath.com/commercial-real-estate-blog/2012/09/12/los-angeles-apartment-market-set-for-significant-growth/

Source: Chris Gomez-Ortigoza, Marketing Consultant

Asian Capital Infusion – San Gabriel Valley and Beyond

In recent months, the new home market in Los Angeles has begun to show signs of improvement with increases in absorption rates, higher pricing and improved buyer traffic. These signs are welcome in an unsteady time and can be strongly attributed to the strength of Asian home buyers. You may be wondering, what is special about Asian home buyers?

Cash and lots of it! Whether speaking with sales agents and home builders in Pasadena, Azusa and other cities, it is astonishing to hear the strength of the deals that are being done by Asian buyers and investors. In a survey of actively selling and recently sold out communities, sales agents expressed as many as 1 out of 3 sales to Asian buyers have closed with 50-100% cash down payments. An even larger proportion of sales to Asian buyers have been well in excess of twenty percent cash down payments to purchase homes. As witnessed by Land Advisors Organization, the Asian buyer pool has even begun branching into new home communities in markets that have been traditionally dominated by other ethnic groups including, Northeast Los Angeles and the San Fernando Valley.

With such a strong influence on the new home market, builders that design communities to meet the needs and desires of the Asian demographic have seen above market pricing, brisk absorption and incredible buyer satisfaction.

In addition, Asian investors have been a strong source of capital infusion via the EB-5 financing program. The program allows Overseas investors receive a green card and get on a fast track to US citizenship upon investing $500,000 into a venture that creates jobs. Each $500,000 investment qualifies for one green card if it creates ten Jobs. Hospitals, Assisted living and Hotels are popular investment due to the high number of jobs created, but residential developments are also being regularly financed through the EB-5 program as well.

The following articles both highlight the strength and demand occurring in the San Gabriel Valley and surrounding parts of Los Angeles from Asian home buyers and investors.

http://speakingofrealestate.blogs.realtor.org/2011/04/25/asian-wealth-adds-up-to-u-s-home-sale-boom/

http://www.usatoday.com/money/economy/housing/story/2012-04-03/us-homes-lure-chinese-buyers/53977638/1

Within the past three months, the Los Angeles Infill Team at Land Advisors has marketed three deals in the San Gabriel Valley and continues to see a strong desire for builders and developers to acquire new communities in this area.

For information regarding available deals and market data, please contact Chris Gomez-Ortigoza, Tim Barden or Richard Byrd at (626) 376-9840.

Source: Chris Gomez-Ortigoza, Marketing Consultant

The Flipping Indicator – New Projects Vs. Flipped Homes

The previous Landed blog posted by Land Advisors’ Los Angeles Urban Infill Team highlighted the value increases placed on flipped homes throughout a variety of Los Angeles neighborhoods.  (Re-read: Flipping Over L.A.: Out With the Old, In With the New)

For this post, we take our analysis a step further and compare how values of flipped single family detached homes correlate with those of newly constructed small lot detached and townhome units.  Conveniently, two public homebuilders have opened up projects in Northeast Los Angeles within the past week:

  • The first is Pulte Home’s project in Eagle Rock called Mosaic.  The project consists of 18 Small Lot Detached Units.
  • The second is D.R. Horton’s project in Echo Park called 36 on Echo.  The project consists of 36 Townhome units.

The first chart below represents average sales prices for flips that occurred in Eagle Rock and Echo Park.

This second chart below illustrates the asking prices at both new projects.

In comparing the two charts, note that the average square feet of the flips in each neighborhood is between the smallest and largest unit size at each new project.  You can see that the average flip pricing on a price/sq. ft. basis in each neighborhood lands squarely within the expected price/sq. ft. revenues at each project.  On a nominal pricing basis, the project in Echo Park exceeds the average flip values in the neighborhood, while the project in Eagle Rock is in the same range as the flipped homes in the area.

Why is this significant?  In our experience, properly projecting revenues on infill projects is a difficult task and has chased away a fair share of possible builders and developers.  By utilizing the correct data and local market indicators, the Urban Infill Team has created a system that helps instill a sense of comfort on project pricing for planned infill developments.

Land Advisors’ Urban Infill Team was involved in the acquisition of both of the above referenced projects, and our projected pricing was very similar to the values illustrated above.  If you are interested in discussing valuation, acquisitions or dispositions in the Urban Los Angeles market please contact…

Source:  Chris Gomez-Ortigoza, Marketing Consultant, (626) 376-9840 ext. 14; Richard Byrd, Senior Marketing Consultant, (626) 376-9840 ext. 13; and Tim Barden, Marketing Consultant, (949) 852-8288 ext. 30

Flipping Over L.A.: Out With the Old, In With the New

On March 10th, the Los Angeles Times printed an article by Alejandro Lazo titled, “Investors Flip over Highland Park Homes.”  This article details how investors are purchasing physically and/or financially distressed homes in Highland Park at severely discounted values, and renovating both the interior and exteriors of the homes.  Once the homes are upgraded, the investors put them back onto the market, where they are quickly snatched up by young hipsters and urbanites, yielding great returns for the investors. 

While Lazo’s article does a good job of summarizing the L.A. flip story, his article only begins to illustrate the dramatic home flip activity in the denser, urban areas of Los Angeles. 

In the last 24 months, the Land Advisors Organization Urban Infill Team (Richard Byrd, Tim Barden and Chris Gomez-Ortigoza) has utilized a proprietary method to create a “Flip Analysis” in areas including Hollywood, Silver Lake, Mid-City, Echo Park, Eagle Rock and Pasadena.  In completing each Flip Analysis, the Team is able to draw conclusions and provide concrete information regarding the values that new home buyers place on turnkey homes in a specific neighborhood.  Providing the Flip Analysis creates a level of comfort for builders and developers assessing values, as it illustrates the tremendous demand each flip creates.  More importantly, it shows land buyers the range of values they can expect for a new development in neighborhoods that have little to no recently built, comparable projects. 

The chart below illustrates average values associated with a handful of “Flip Analyses” that we have run during 2011-2012.

The data above represents only averages associated with flips in each neighborhood.  The value increase for individual flips varies with the amount of work done on the home.  Homes with minimal improvements, such as new sod and paint may command a 10-20% increase in value.  Completely gutted and remodeled homes regularly command 50-100% increases in value and more than double in value in some instances. 

As a final snapshot of the Los Angeles infill market, a recent flip analysis illustrated that approximately 18% of flipped homes in Eagle Rock sold for 3% or more above their flipped asking price.  With multiple offers for each property, the turnkey home values are being bid up above asking prices and are creating higher values that positively affect the entire neighborhood.  In today’s market, this is a great sign of what is to come and shows the demand for both new and turnkey homes is alive and well in Los Angeles. 

If you are interested in hearing more about the L.A. Flip Analyses, please contact Land Advisors’ L.A. Urban Infill Team.

Source: Chris Gomez-Ortigoza, Marketing Consultant, (626) 376-9840 ext. 14; Richard Byrd, Senior Marketing Consultant, (626) 376-9840 ext. 13; and Tim Barden, Marketing Consultant, (949) 852-8288 ext. 30

PFAR MLS was used to source all resale information.

Urban Infill Team Facilitates 1031 Exchange Deal in Burbank

Land Advisors Organization – California Division is pleased to announce the closing of a 21-unit apartment building, where Steve Porretta purchased the Burbank property from Essential Assets, LLC for $4,200,000.

Land Advisors’ Urban Infill Team, which is based out of the firm’s Pasadena office, facilitated the multi-family property sale by assisting Mr. Porretta with a 1031 Exchange. 

In 2011, the Team assisted Mr. Porretta with the sale of his Silver Lake property, “Waverly Terrace Townhomes,” which included 63 unimproved townhome lots with a recorded final map.  

Mr. Porretta then needed to find a reinvestment opportunity and looked to Land Advisors’ market knowledge and extensive network of industry contacts for purchase options.  Through its list of industry relationships, the Urban Infill Team was able to source the off-market 21-unit apartment building, and represented Mr. Porretta and Essential Assets, LLC in the transaction.

“Mr. Porretta needed something very specific,” noted Land Advisors’ Senior Marketing Consultant Richard Byrd.  “By calling on our industry contacts we were able to provide several opportunities for Mr. Porretta to choose from.”

Read the Complete Press Release Here 

Los Angeles’ Big Idea: the Small Lot Subdivision

Angelenos are faced with many tough questions when deciding to buy a home.  Most will ask…  How bad is the commute to work?  What amenities are close by?  Is the HOA affordable?

According to the Los Angeles Economic Development Corporation, more than half of a million people commute more than 60 minutes each way to jobs in Los Angeles County every day.  This includes commuters traveling into Los Angeles from Ventura, Orange, Riverside and San Bernardino Counties.  Many of these commuters work in areas with high job concentrations, including Downtown, Long Beach and West L.A.  For a long time, a large supply of new and affordable single family homes could be found only in the peripheral areas, far from the Los Angeles job centers. 

In 2005, the City of Los Angeles adopted the Small Lot Subdivision Ordinance, which allows for a new style of dense, fee simple homes, closer to the jobs and amenities of the Los Angeles core. 

Land Advisors’ L.A. Basin Urban Infill Team is currently involved in several small lot subdivision projects throughout Los Angeles and sees a tremendous increase in interest from builders, developers and home buyers for the product.  The projects vary in style from Spanish style contemporary to sleek, modern designs.  In addition to the variety of product, many subdivisions are located within 15 minutes of Downtown, Hollywood, Dodger Stadium, Staples Center, job centers and other entertainment venues. 

Echo Park Small Lot Subdivision

A somewhat unnoticed, but extremely beneficial aspect of the small lot subdivision is the lack of a Homeowners Association.  Many HOA fees in Los Angeles exceed $300 per month, while a typical small lot subdivision project has no fee or a maintenance fee under $100 per month.  This is an additional $200+ per month which could translate to more than $40,000 during the course of a 30-year mortgage. 

As the Small Lot Subdivision popularity gains momentum, Land Advisors continues to track newly permitted projects and sales data for active communities.  For more details about the small lot subdivision ordinance, developable sites and how active projects are selling, please contact Land Advisors’ L.A. Basin Urban Infill Team.

Source: Chris Gomez-Ortigoza, Marketing Consultant, (626) 376-9840 ext. 14

The Metro Gold Line: a Developer’s Gold Mine

This summer, the Construction Authority awarded the Kiewit Parsons Joint Venture, a $486 million dollar contract to complete the Pasadena to Azusa Gold Line extension project.  Phase 2A is slated to be completed in early 2015, with service running from Downtown Los Angeles to Azusa.  The project will create new Gold Line stations in Arcadia, Monrovia, Duarte, Irwindale, West Azusa and East Azusa.  Each city along the Gold Line intends to utilize these new stations to enhance residential, retail and mixed-use developments within walking distance of each station. 

The goal of these Transit Oriented Developments (TOD) is to increase the use of public transportation, decrease the effects of sprawl and create a more sustainable way of living.  TODs generally extend out a quarter to a half-mile from a transit station.  The existing development around many of the proposed stations lack density and will allow for the acquisition and entitlement of many parcels for a more dense uses. 

Why is this important?

The San Gabriel Valley is one of the strongest real estate sub-markets in all of California.  The area boasts several examples of successful projects built during the last few years that have exceeded sales expectations.  This includes Pulte Homes’s Rosecrest Lane project that averaged sales over $800,000 per home in Pasadena in 2010-2011. 

Recent land acquisitions, including a 5.4-acre industrial site in Monrovia that is now planned for mixed-use, show the propensity of buyers and developers for both traditional and transit-oriented areas of the San Gabriel Valley.  With densities expected to double in close proximity to a number of these stations, an estimated increase of 100 to 300 residential units will be needed to satisfy renter and buyer demand at each station. 

The Los Angeles Infill team is closely monitoring the Gold Line extension, and can answer any questions builders and investors may have in regards to preparing for the “gold rush.”  For more news and events related to the Gold Line, check out www.foothillextension.org.

Source: Chris Gomez-Ortigoza, Marketing Consultant, (626) 376-9840 x14

How Do You Cut Red (Development) Tape? LA Tries Some New Scissors…

In an attempt to create a more efficient, transparent system for development services, the City of Los Angeles initiated a macro scale overhaul of its current development system in early 2011.  In recent weeks, the Development Reform Strategic Plan was passed.  The Plan is the result of more than six months of cooperation between several City departments, including Planning, Building Services, Public Works, the Mayor’s office, several outside consultants and local stakeholders. 

According the City, these reforms and strategic plan updates will make Los Angeles a better place.  Some of the changes will include the following:

  • Zoning Code Simplification and Comprehensive Zoning Code Reform. An overhaul of the City’s antiquated zoning code to simplify the rules and bring the code in line with the 21st century vision for Los Angeles.
  • Updated Community Plans. The updates of seven new Community Plans and building a framework for ongoing long range planning efforts, enhancing a culture of good planning that ensures our policies are consistent with our goals and priorities for our communities.
  • Resolution of Conflicting Conditions. The establishment of a system for resolving interdepartmental conflicts that arise during the entitlement and permitting processes. Customers will receive detailed project conditions up front, and will no longer face delays that result from conflicting requirements.
  • Development Services Case Management. The addition experienced staff from five key departments together in one office to provide comprehensive project navigation, facilitation, and problem-solving services.
  • Leading-Edge Technology. Investment in new technology that will provide the public with greater transparency and enhanced access to project information, provide City staff with tools to help them work efficiently, and create a less paper-intensive review process.

Last year the City approved more than $3.3 billion dollars in new construction, which created roughly 23,500 jobs.  With the new Development Reform Strategic Plan in place, the City aims to cut much of the red-tape that slows the development and improvement of Los Angeles and spur a revival that is needed to boost the local economy.  Learn more: http://www.losangelesworks.org/businessServices/DevelopmentReformStrategicPlan.cfm

Source: Chris Gomez-Ortigoza, Marketing Consultant, (626) 376-9840 x14

Urban Infill: War and Peace in the LA Basin

The Land Advisors Urban Infill team is currently working with several developers who have recently submitted tentative tract maps, are revising existing tract maps, or intend to submit new tract maps for for-sale housing developments.  The Team is seeing the highest concentration of activity in Northeast Los Angeles (Echo Park, Silver Lake, Eagle Rock, and Glassell Park).

The City of Los Angeles Department of Building and Safety’s September newsletter revealed that the City’s number of housing starts year-to-date is still low (-31% YOY).  However, plan check revenue is up (41% YOY), indicating an upswing of future housing supply.  Newsletter Sept 2011

Ideally located new home communities selling well-designed homes are showing strong sales numbers. In the third quarter, the Urban Infill Team led the closing eight single family attached lots at Lennar’s Playa Vista. In response to the growing demand for additional product in Playa Vista, Lennar closed the 2nd and 3rd lot take downs four months early. 

Los Angeles Land Use Update:  The Planning Department’s Code Studies Section unveiled late last week a draft ordinance that would allow the creation of site-specific development rules that could loosen-up laws on density, setbacks and open space requirements. The new process, called Planning Unit Development, is part of the Department’s 3-year-old effort to streamline the Municipal Code while also encouraging more public participation. Some might say those goals are as congruent as war and peace. http://www.landusela.net/2011/09/planning-dept-unveils-latest.html

Source: Tim Barden, Marketing Consultant, (949) 852-8288 x30, and Richard Byrd, Senior Marketing Consultant (626) 376-9840 x13, and Chris Gomez-Ortigoza, Marketing Consultant, (626) 376-9840 x14

Urban Infill Update: Multi-Family Market “On Fire!”

A brief Q&A this morning with Land Advisors’ Urban Infill Marketing Consultant, Tim Barden, revealed the following:

  • Demand for multi-family apartment sites in and around the L.A. Basin is WAY up!
  • Hottest selling areas include Hollywood, Pasadena, L.A.’s Westside, and the South San Fernando Valley
  • Existing Class A apartment buildings are selling at record low cap rates
  • Every multi-family developer seems to be trying to get a piece of the action
  • Commentary: With talk of another economic “double-dip,” is multi-family experiencing the same micro-bubble that was seen after the fall of the housing market in ’06/’07?

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