San Diego County’s Land Market On Its Own High Speed Train

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Unlike our Sacramento politicians’ boondoggle, San Diego’s land market has been picking up steam faster than a bullet train over the last few months.  According to reliable reports, over 2,400 new residential units were sold last year in San Diego County:

  • 1st Quarter 2012:   475 units sold
  • 2nd Quarter 2012:  680 units sold
  • 3rd Quarter 2012:   631 units sold
  • 4th Quarter 2012:   642 units sold

It is also important to note that approximately one third of the actively selling new home developments in 2012 consisted of condominiums or townhomes.  We expect that percentage to dramatically rise in the near term as monthly rental rates in many parts of the county now exceed monthly mortgage payments (i.e., P.I.T.I. and association dues), available at new construction condominium and townhouse communities.

Job Creation on the Rise

Evidence that this market momentum is growing can be seen in the sales volume reported for the traditionally slow 4th Quarter holiday season where sales exceeded the previous quarter and there was approximately a 30% increase in comparison to the 4th Quarter of 2011 (i.e., 494 sales reported in the 4th Quarter of 2011 versus 642 sales accounted for in the 4th Quarter of 2012).

Absorption Rates Expected to Increase

Although the average rate of absorptions of actively selling developments is still in the 2.0 sales a month range, a rapid decline in available new home supply is expected to boost absorption rates on remaining projects in the near term. For example, there were 113 actively selling new home developments in San Diego County during the 4th Quarter of 2011.  At the end of 2012, there were only 73 actively selling projects – that’s a 55% decline.  Approximately 60 projects sold out over the course of 2012, while only approximately 20 new projects entered the market during the same period of time.  Among the remaining new home developments in the County, approximately 2,233 units are left to either enter the market or currently remain unsold.  This equates to approximately an 11 month supply based upon a continuation of new home sales at a minimum of last year’s rate (i.e., approximately 2,428 annual sales reflecting a recovery beginning in the 2nd Quarter of 2012).  This bodes well for the health of the market going forward given 2012 sales did not pick up steam until the 2nd Quarter. Thus 2013 sales are expected to exceed last year’s total.  Historically, approximately a 12 month supply of unsold inventory (units offered for sale and remaining unsold), is considered approaching a supply/demand balance.

4thQ Actively Selling Projects

 Many housing analysts refer to the housing market rebound in San DiegoCounty and the nation as a “jobless recovery.”  While there is no question that the combination of a dwindling inventory and historically low interest rates have jump started the market, job creation in San Diego County over the last year has increased notably (approximately 29,000 annual net new jobs by year’s end in 2012 as estimated by Point Loma University Economist Lynn Reaser). This is a major factor which has largely flown under the radar due to the publicity related to a declining but relatively high unemployment rate (8.4%).

The Land Advisors Organization Team in San Diego is actively sourcing new land development and home building opportunities.  Call us today before this train is out of sight!

Source: Bob McFarland, Marketing Consultant, (858) 568-7428 ext. 12

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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

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

West Riverside Report

MULTI-FAMILY: Last week Land Advisors’ West Riverside Team wrapped up the marketing of a 16.5-acre mixed-use (multi-family for-rent and commercial) site known as The Village at Magnolia Square, located in the City of Riverside.

With a lack of comparable land sales early in 2012, the initial challenge in selling the multi-family for-rent land was determining the market value.  Assuming a successful escrow and close, The Village at Magnolia Square will mark the third successful multi-family for-rent land sale in the West Riverside submarket (Land Advisors Organization has been a party to all three sales). With three transactions soon under its belt, Land Advisors’ has established a real value foundation for similar land sale opportunities in the submarket.

SINGLE FAMILY: On the single family detached home front, the overall market in West Riverside remains stagnate.  However, homebuilders are finding success in some areas of South Riverside County such as Temecula.  Stronger than expected interest from homebuyers is causing some homebuilders to increase home prices. If strong absorption rates continue, the finished lot and future lot supply within Temecula will quickly vanish, and likely result in pressure on lot sales in Murrieta, Menifee and Wildomar. One development company has already noticed this trend and purchased one development site and has another in escrow in Wildomar.

APPROVALS:  On Tuesday March 13th, the City of Wildomar heard residents’ environmental concerns for a proposed 151-acre residential project. The project will be developed into 315 single family homes with 3.5 acres dedicated to a commercial center and open space. 

In addition, Menifee’s City Council approved a new General Plan land use map after a two year-long process, with a vote of 4 to 1. The land use plan is the first element in writing for the City’s new General Plan and serves as the basic blue print for how land will be used going forward.

Source: Mitch Casillas, Marketing Consultant, (949) 852-8288 ext. 23