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SAN DIEGO NEWSLETTER 3rd Quarter 2014

The San Diego market remains strong in Q3 2014.  Coastal prices for lots and homes are at or near record highs.  All indications are for continued strength for the foreseeable future based on strengthening job growth and low-interest rates.

New Home Trends

San Diego County currently has 57 actively selling communities with a majority (33%) of the units being offered as attached product. Of the 21 builders in the San Diego market, Standard Pacific and Shea Homes each have 9 actively selling communities making them the most active builders. Sales per month are averaging 2.74 per development. The average price per square foot is $285. Average square feet is 2,810.

SD Newsletter New Home TrendsTo view the entire San Diego Newsletter click on the following link: San Diego Newsletter 3rd Quarter 2014

Want to receive our San Diego Newsletter every quarter?  Email Katie Spitznagel at kspitznagel@landadvisors.com to be added to the distribution list.

 

Source: David Landes, Marketing Consultant, (858) 568-7428 ext.11 and Devin Jenkins, Marketing Consultant, (858) 568-7428 ext.13

 

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It’s Always Sunny in Victor Valley

In the Victor Valley submarket, three residential land deals have closed escrow since August of this year.  Two of the deals were distressed, and all three were considered to be undervalued by their purchasers. 

  1. The first sale consisted of 276 single family lots in Victorville that sold to a private investor in late August.  The investor bought the land from a lender in “blue-topped” condition with a recorded final map. 
  2. The second project included 244 unimproved single family lots with an approved tentative tract map.  A private investor bought this Victorville project from a private homebuilder looking to generate cash and divest from some fringe markets.
  3. The third project closed escrow just this week.  A private investor purchased 36 single family lots, four model homes and seven standing inventory homes in Hesperia from a lender.  The buyer intends to finish the homes and sell them to homebuyers at retail prices.  It plans to hold the unfinished lots until the market recovers.

The larger story here is that the buyers of these properties are typical of the groups looking to buy land in the Victor Valley right now.  All are well-capitalized private investors looking for long term (4-10 years) investment opportunities.  These buyers are coming to the table with cash and are taking advantage of the extremely depressed land values in the region.  In many cases, active Victor Valley investors are utilizing overseas investors to get their deals done.

Land Advisors Organization, which has been tracking residential land values in the Victor Valley for about fifteen years, currently sees values at about $42,500 per single family lot in “finished” condition (7,200 sq. ft. lots).  At the market peak in 2006, these same lots were trading for about $130,000 per lot (a 67.3% drop from peak).

Despite the dismal news in land values, recent data shows that many Victor Valley residents are choosing to stay in the area.  In some areas, populations within the submarket are actually increasing.  People are moving into the area to take advantage of the affordable housing and increasing job growth opportunities.

Users of industrial facilities are also taking advantage of the low prices.  In September, United Furniture Industries (UFI) signed a lease for over 505,000 square feet of industrial space from Sterling Capital Investments in the Southern California Logistics Centre (SCLC).  When this new space is occupied, UFI plans to employ 400 local Victor Valley residents over the next 36 to 48 months.

Source: Randy Coe, CCIM, Senior Marketing Consultant, (949) 852-8288 x18

West Riverside County: 4 BIG Deals

Several large residential land deals (consisting of +500 lots) have closed in West Riverside County in 2011. 

Land Advisors represented the buyers and the sellers in three of the most notable transactions: McSweeny Farms (1,330 lots in Hemet), Summerwind Ranch (3,683 lots in Calimesa) and Underwood (543 lots in Menifee).  Another large completed deal to note is Stoneridge with 2,200 lots in Unincorporated Riverside County.

Public homebuilders are currently refraining from purchasing more residential lots within the County’s secondary and tertiary markets of San Jacinto, Hemet and Perris, as finished lot values in these sub-markets are off 55-65% from peak values. 

The lot values in and around the primary market of Corona are currently off peak values by 35%.

Richmond American Homes (MDC), Beazer Homes (BZH), D.R. Horton (DHI), and Meritage Homes (MTH) have completed transactions in the West Riverside County sub-market during 2011.  However, private investors have been more aggressive in seizing opportunities, and are proving to be more active buyers.

Source: Jeff Spindler, Founding Principal (949) 852-8288 x12 and Mitch Casillas, Marketing Consultant (949) 852-8288 x23