New Home Sales in Santa Barbara and San Luis Obispo County Pick Up The Pace!

New Home Closings in San Luis Obispo Climb According to Newest Data, Prices Steady

Posted on: Mar 07, 2013 07:33:55 AM

In the San Luis Obispo, CA market, closings of new homes jumped year-over-year in December, and the increase was greater than November 2012. New home closings moved from 12 a year earlier to 52 after the figure moved from eight in November 2011 to 15 in November 2012.

A total of 154 new homes were sold during the 12 months that ended in December, up from 114 for the year that ended in November.

New home closings were 52 out of 420 total closings, making up 12.4%. This is up on a percentage basis from 12 of 366 a year earlier. Following a year-over-year increase in November, closings of new and existing homes also rose year-over-year in December.

Pricing and Mortgage Trends
The average per-unit price of new homes was $442,185 in December 2012, unchanged from a year ago. This came after a 5.0% decline in November from a year earlier.

Average mortgage size on new homes fell from $339,237 to $287,378. Average mortgage size on new homes went from $290,161 in November 2011 to $379,406 in November 2012. For new home closings, the percentage of the sale price that was being financed slid 11.7 percentage points year-over-year to 65.0% in December 2012. In November 2012, there was a 23.3 percentage point surge from a year earlier.

Other Market Trends
The share of new home closings made up by attached units has risen while the share belonging to single-family homes has fallen. Attached closings made up six of 52 new home closings after accounting for one of 12 a year earlier. Meanwhile, single-family homes made up 46 of 52 new home closings after making up 11 of 12 a year earlier.

The average unit size of newly sold homes fell from 2,069 square feet a year earlier to 1,767 square feet.

Foreclosures and real estate owned (REO) closings continued to drop from a year earlier in December, but did not appear to be dragging the market. Out of all existing home closings, foreclosures combined with REO closings accounted for 23.1% of closings, below 48.3% a year earlier. The percentage of existing home closings involving foreclosures dipped to 9.5% in December from 17.8% a year earlier while REO closings as a percentage of existing home closings declined to 13.6% from 30.5% a year earlier.

Source: Housing Intelligence

New Home Sales and Prices Both Increase in Santa Barbara According to Recent Data

Posted on: Mar 07, 2013 07:34:03 AM

The Santa Barbara, CA market saw a rise in new home closings in December year-over-year, and the increase was greater than November 2012. New home closings moved from six a year earlier to 40 after the figure moved from nine in November 2011 to 19 in November 2012.

A total of 192 new homes were sold during the 12 months that ended in December, up from 158 for the year that ended in November.

New home closings were 40 of the 419 total closings, up on a percentage basis from six of 429 a year earlier. Following a year-over-year rise in November, closings of new and existing homes slipped year-over-year in December.

Pricing and Mortgage Trends
The average per-unit price of new homes was $642,463 in December 2012, up from $635,250 a year ago. This followed a 34.9% decline in November from a year earlier.

Average mortgage size on new homes increased to $434,179 from $417,104 last year. It went from $353,984 to $350,950 from November 2011 to November 2012. Of the overall sale price, the percentage that was being financed rose 1.9 percentage points year-over-year to 67.6% in December 2012. This was another boost after November 2012 when there was a 28.1 percentage point rise from a year earlier.

Other Market Trends
As a share of new home closings, single-family home closings have risen from last year while the share belonging to attached units has fallen. Single-family home closings made up 39 of 40 new home closings after accounting for five of six a year earlier. Meanwhile, attached units made up one of 40 new home closings after making up one of six closings a year earlier.

Foreclosures and real estate owned (REO) closings fell in December from a year earlier, but remained a drag on the market. Together, foreclosures plus REO closings made up 30.6% of existing home closings, down from 49.6% a year earlier. The percentage of existing home closings involving foreclosures dropped to 11.3% in December from 26.0% a year earlier while REO closings as a percentage of existing home closings fell to 19.3% from 23.6% a year earlier.

Source: Housing Intelligence

Source: Matt Power, Senior Marketing Consultant, (805) 845.2660

2012 Ends with Numerous Year-End Closings in Southwest Riverside County

The year of 2012 ended with the most activity in southwest Riverside since the peak of activity in 2006. In December alone, public homebuilders closed on over 900 lots. The lot condition ranged from finished lots to unimproved mapped lots. One of the year end highlights of 2012 were two tentative map lot projects contained within the Temecula School District boundary with Land Advisors brokering the sales. The two maps combined to generate over 300 lots and were bought by two public homebuilders.

On the apartment front, a notable fully leased apartment complex is in escrow at a rumored sales price of +/- $215,000 per door.  While this per door number might seem low when compared to the coastal market, the comp will represent the highest per door sale since 2008.

The above transactions are a result of a number of factors from low interest rates to lack of housing supply available to both buyers and renters. In 2012, we saw a decrease in foreclosure sales as well as REO sales and higher sales volume all together when compared to 2011. As we move forward in the New Year, home sale prices are forecasted to receive upward pressure because supply is expected to remain flat.

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

Why is the market so hot?!!!!

It always boils down to the fundamentals — Supply and Demand. We know that the Bay Area is always supply constrained and the real estate collapse took many of the higher density projects and put them in a deep freeze, meaning we had even fewer new projects adding to the supply from 2008 ’til today. Now we have a new phenomenon, for all the people that got foreclosed on and were supposedly going to be renters the rest of their lives, it turns out they still want to buy homes and for the many that got foreclosed early in the cycle their time in the penalty box is over.

http://www.insidebayarea.com/business/ci_21865117/foreclosure-victims-buying-homes-again

And as foreclosures in CA and the Bay Area continue their downward trajectory, people waiting for that ‘distressed’ buying opportunity may never see it materialize.

http://www.foreclosureradar.com/foreclosure-report/foreclosure-report-september-2012

Rather than competing with 10-20 other offers as soon as a ‘bank-owned’ home hits the market, buyers are finding the process of buying a new home to be more appealing as builders ramp up community production.

http://www.sfgate.com/realestate/article/Bay-Area-new-home-construction-rebounds-3986773.php#page-1

Source: Steve Reilly, Marketing Consultant, (925) 368-3128

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

San Diego: How Banks Helped the Housing Market Get Back On Its Feet

“Shadow Inventory” was a dirty word for most of the past recession with respect to the housing market.  In general terms, it meant there was a large number of homes in foreclosure or soon to be foreclosed upon, which would flood the market and drive down home prices, and keep the housing market on its heels for years to come.  While no one will argue that the sheer volume of foreclosures nationwide and in Southern California is substantial, the threat of flooding the market has not materialized. 

 In San Diego County, as in most areas of Southern California, the Banks were smart and only released foreclosures to the marketplace in measured increments, so as to attract interest in inventory at reduced prices without flooding the market.  San Diego County foreclosures have recently been reported to be down 51% in comparison to a year ago.  As a result, investment groups interested in purchasing large quantities of lower priced foreclosure properties for the strong rental market have helped generate an overall market craving in San Diego County for relatively low-priced housing (generally posture below approximately $500,000).  Brokers active within marketplaces sporting significant volumes of housing priced below $500,000 report multiple offers for any available inventory, often driving up prices.  The average price of new and existing housing sold last month in San Diego County ($335,500), accounted for a 1.7% increase over the average price of homes sold in June of 2011.  The total sales volume in the resale market county-wide for single family detached homes through the first half of 2011 represents almost a 10% increase over the first six months of last year.

 

The market recovery for low-priced housing, coupled with long-standing reduced interest rates, is very slowly beginning to work itself up the price ladder of housing throughout San Diego County.   For example, in higher priced submarkets such as the North County Coastal Area, rates of absorption for new home developments have grown from an average of one sale per month per project last year, to approximately two sales per month in 2012. 

 Although generation of new jobs in San Diego County is headed in the right direction, the slow pace of employment growth has been the major force preventing a rapid recovery in the housing market.  With the potential cut back in government defense spending in San Diego County next year, the pace of job growth is not expected to pick up in the very near term.  However, continued low levels of housing inventory (the number of homes listed for sale at the end of the 1st Quarter of 2012 fell to its lowest level in nearly three years), government maintenance of low interest rates, and continued growth in demand for rental housing is expected to continue to fuel the housing market recovery, but at a continued gradual rate of growth.  Most economic forecasters are predicting housing appreciation in San Diego County in the near term to range between approximately 2% and 3% annually.  The moderate pace of market recovery may be a blessing in disguise; as a more gradual velocity in recovery will give the market its legs for more sustained growth; in contrast to the rapid inflation run-ups of past market cycles which eventually lead to faster boom to bust corrections. 

 Down the road, this bona fide housing recovery at the bottom of the “food chain” so to speak, will likely be looked upon as the flash point which signaled the beginning of the market recovery in the housing market in San Diego County.

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

San Diego County Market Trends Update

The Coastal Counties of Southern California (including San Diego County), continue to garner attention as on the fast track to a near-term market recovery in the housing market.

The word on the street today in the real estate industry (locally and on Wall Street) is that San Diego County is suffering from a supply shortage of new construction rental housing.

A robust supply of capital appears to be anxiously awaiting the opportunity to finance the development of new multi-family housing in “A” and “B” locations throughout the County. Given the perceived shortage of new construction rentals, nine multi-family projects totaling over 2,600 units are currently in the planning pipeline.

Vacancy rates among new rental townhouse properties that are built and designed with for-sale housing features in the County are close to 100% occupancy, likely due to the ownership of housing design and upgraded features (direct access to two-car enclosed garages etc.), attracting the many foreclosure and short sale “refugees,” or casualties from the “Great Recession.”

The majority of vacant multi-family properties are currently offered in the range of $50,000 to $100,000 per door, depending upon the strength of location.

SAN DIEGO S-CURVE: In the new construction for-sale housing sector, the “San Diego S-Curve Submarket” has dominated new home sales in the County for the last 12 months.

The S-Curve Submarket can be described geographically as: Beginning with the Carmel Valley (Pacific Highlands Ranch, Carmel Country Highlands etc.), moving east along Highway 56; and then north through the Torrey Highlands/Westview High School area along Camino Del Sur up to and including the Del Sur Ranch, and then east through the 4S Ranch and Camino Del Norte Road.

New home communities located within the S-Curve submarket attract many of the white collar executives and engineers who are employed in the biotech and high-tech firms such as Qualcomm, Sony, Hewlett Packard, etc.  These consumers place a heavy premium on the stellar public schools serving this submarket.  They also find access to this area convenient through Interstates 5 and 15, and Highway 56.  The majority of subdivision land within this submarket accommodating new single family detached housing has been equivalent to values ranging between approximately $300,000 and $500,000 per finished lot, depending upon location and lot size.

North San Diego County: In North County large scale residential development remains to be developed in master plans within Del Sur Ranch, the West Robertson Ranch, and Pardee’s land holdings in the Pacific Highlands Ranch Area (east Carmel Valley). A number of sizeable land plays located within the North County perimeter submarkets (Bonsall, Escondido, Valley Center, Fallbrook, Pala Mesa, and the I-15 Corridor between Riverside and San Diego Counties) are awaiting a demand push for the relative large supply of lots and homes in the region.

East San Diego County: In East County, the Fanita Ranch in Santee has yet to be developed.  A steady supply of small bite-sized infill land opportunities are emerging.

South San Diego County: The South Bay is the “800-pound gorilla in the room” because it has thousands of residential units remaining to be developed within existing and proposed master planned communities in the East Chula Vista area and Otay Mesa area.  The Baldwins and extended family, McMillin Communities, and Home Fed are a few of the builders/developers with skin in the game.  In addition, the area between East Chula Vista and the Mexican border (Otay Mesa, Brown Field etc.) has the potential for a large volume of new housing development within the next five years given the revised zoning currently being considered by local government.

With the pending housing market recovery, the development of a vibrant downtown San Diego housing market will be in reach again, once the dust settles concerning local government redevelopment.

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

West Riverside County: 2012 Transaction Characteristics

Market Observations:  So far in 2012, the West Riverside land market is seeing a limited number of finished lot transactions.  The bulk of the land buyer activity is directed at unimproved land, where buyers plan to add value through the entitlement process.

2010/2011 saw a number of sales driven by bank owned REO with a typical escrow calling for a 30-day due diligence period and a 15-day close. The market has absorbed the bank REO projects and land values have remained relatively flat since Q3 of 2010. This dynamic has forced buyers to get more creative when submitting offers in an effort to minimize risk. A number of transactions in 2012 have included the seller carrying back paper on the property for 3-5 years. Since land values have remained flat, seller carry-back works because it generates a higher land value, versus the all-cash deal, and also creates a positive cash flow for the seller from the note interest.

Single Family Detached Market Updates: Homebuilders are continuing to see new home sales success in Temecula and French Valley. Average monthly sales have increased along with sales price. These are all great signs that point to the beginning of a true recovery.

A public homebuilder has closed on an unimproved parcel in Temecula that it intends to develop and build out new homes.  Along the I-15 corridor, a private homebuilder has put some finished lots under contract, and is scheduled to close in 60 days.

Attached Market Updates:  Land Advisors West Riverside Team just announced its latest listing: “Temecula Foothills” – 7 acres in Temecula for a proposed high density residential project (potential for ±140 multi-family for-rent or for-sale units).

Three entitlement escrows are presently in the works in Temecula.  Optimism surrounding the for-rent market continues to circulate in West Riverside Market, specifically Corona and Temecula.

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

Central Valley: So Yer Sayin’ There’s A Chance…

Mixed signals are making it quite difficult to predict where the Kern County residential real estate market is headed in the months to come.  Recent headlines from The Bakersfield Californian include:

Then on the flip-side, there’s “Region leads nation in construction job growth.” Hmmm…

New home sales continue to make up a small part of total sales throughout Kern County and beyond at roughly 6%, according to Hanley Wood.  However, it is clear that well located projects with excess finished lot inventory are now appealing to both local and national builders up and down the 99 Corridor (CA SR 99).

The main issue at hand still remains… Although new home sales appear to be picking up, foreclosures and REO’s still make up over 50% of sales, and in many cases, homes are selling for just over $100/Sq. Ft. (Hanley Wood). Many “broken” projects were purchased by investors during the downturn, yet residential lots are still trading at or below replacement cost.

As a consequence, some investors are forced to sell their investments at a loss, or wait until home prices raise so residual lot values eventually increase.

As with every storm, there is a silver lining.  Construction jobs in Bakersfield have recently increased dramatically.  The Bakersfield Metro area added a higher percentage of new construction jobs over the past year than any other market in the United States according to an Arlington, VA trade group. Federal funding from the Thomas Roads Improvement Program and the American Recovery and Reinvestment Act, along with various Health Care industry expansions and upgrade projects are the main contributors to this growth.

In addition, according to Richard Chapman of the Kern County Economic Development Corp., local growth in the manufacturing, warehouse, and distribution sectors has also spurred along recent construction.  Growth and improvement in these areas are so critical as Bakersfield continues its quest to becoming a more dynamic and diverse economy.

Hanley Wood recently ranked Fresno County (#4) and Kern County (#6) in its list of Top Ten California Counties with the highest new home sale projections for 2012.  Land Advisors is asking, “Is this a sustainable positive upward move or just another head-fake?

Source: Jason Hepp, Senior Marketing Consultant, (661) 702-9080

The Good, Bad & the Ugly in Sacramento

Sacramento Arena Deal is DOA…  After a whirlwind of meetings between the NBA, the Maloof family and the City of Sacramento, the prospect of building a new arena for the Sacramento Kings is officially dead.  In countless meetings held in locations all over the country, the Maloofs agreed on the terms initially laid out by all sides to build a new arena, structure financing plans and establish a timeline for build out.  However, a number of empty promises from the Maloofs finally came to light as the owners did the Texas Two Step with the NBA and the City, revealing that the deal is not feasible, (even bringing in the family’s own economist to illustrate).

Now Sacramento and the NBA both have egg on their face, and the public and the fans have more questions and doubts that the Kings will ever be viable in Sacramento.

Along with the proposed new arena was the potential for a new wave of jobs – construction and permanent – as well as a start to the redevelopment of the Sacramento Rail Yards.  A new arena would have meant new retail shops and restaurants as well as an onslaught of new homes.

All of the redevelopment ideas will have to be put on hold while the City and Maloofs try to sort out their mess.  In the meantime, the people of Sacramento are angry – some prominent business leaders are even calling for the ouster of the Maloofs and want new ownership to lead the Kings to prosperity… we will see what happens.

Now onto some good news…  Sacramento foreclosures of existing homes are beginning to slow.  In fact, the number of default notices filed in the first quarter of 2012 is the lowest since early 2007.  This should be welcome news for both home buyers and homebuilders alike.

Sacramento Foreclosures

In the last several years, new homebuilders in the greater Sacramento area have been building and selling new homes with pricing that is in line with REO inventory, and in some cases even selling below it.  As the REO product has been dumped onto the market, home pricing and new homebuilder margins have been steadily decreasing.  The Northern California Team has even seen some builders impair lots that were bought just 18 months ago.

With the change of wind direction in just in the last couple of months, builders have started to sniff around again looking for deals and build pipelines for 2013 and beyond.  Furthermore, absorption rates have started to tick up as demand for new homes builds upward.

It looks like Sacramento is finally coming out of the ashes and is ready to start the slow grind toward home price appreciation.

Source: Ryan Long, Senior Marketing Consultant, (916) 784-3329 ext. 16

They’re Not Just Buying Cars (In San Bernardino Co.)

Chrysler Group, LLC posted increased sales of 34% in March, its biggest increase since 2008.  The private sector continued a 25-month job growth streak, adding 120,000 jobs.  Across the nation, foreclosures had the lowest quarterly total since the final quarter of 2007.

This frankly, is the kind of news that we’ve all been waiting… and hoping… and waiting, to hear.  But in our industry, home sales are all that matter.  So the question is: Do increased car sales, steady job growth and decreased foreclosures translate to the housing market?  We believe they do and want to highlight some of the recent activity in the land markets that “Team San Bernardino” covers.

  1. In Eastvale, Pulte Homes (NYSE: PHM) has sold 35 homes since January 1st (yes… 35. It’s not a typo).
  2. In neighboring Mira Loma, Richmond American (NYSE: MDC) is averaging 4 sales per month through the start of the year.
  3. After opening just three weeks ago, Meritage Homes (NYSE: MTH) has sold 5 homes in its Rancho Cucamonga project, Whispering Ranch.
  4. Beazer Homes (NYSE: BZH) is continuing to sell well in its Yucaipa and Upland projects, averaging approximately 4 sales per month in each project.

So Here’s the Trend…

Improved absorptions lead to decreased lot inventory.  Decreased lot inventory leads to dwindling pipelines.  And thus, dwindling pipelines lead to increased land acquisitions!

So stay steadfast brothers and sisters!!  We are nearing the end of the proverbial tunnel.

Source: Winn Galloway, Senior Marketing Consultant and Doug Jorritsma, Senior Marketing Consultant. You can reach them both at (949) 852-8288.

RED LIGHT: CA Foreclosures, GREEN LIGHT: Sacramento Arena

California Attorney General Kamala Harris has called on federal mortgage giants Fannie Mae and Freddie Mac to place a “good-faith pause” on all foreclosure sales in the state following the multi-state settlement with the nation’s largest banks over mortgage abuses. The nationwide settlement calls for more than $12 billion in relief for struggling California homeowners in the form of principal reductions and short-sales. Read more: California AG calls for Fannie Mae and Freddie Mac to halt foreclosures

Does this “good-faith pause” help the housing industry?  Will delaying the foreclosure process on thousands of homes prolong the time until the housing market recovers by creating an even bigger backlog of shadow inventory, potentially resulting in continued home price depreciation?  Interesting…   

Sacramento Arena Update:  The City of Sacramento, the NBA and the Sacramento Kings’ organization have come to a tentative agreement to build a new arena in the Sacramento Railyards development, with the potential of keeping the Kings in Sacramento for next 30 years.  This is welcome news for the Sacramento region, especially if the owners of the Railyards develop the area surrounding the proposed new arena. 

If the stars align and a financing plan takes shape, the new arena will be completed the end of 2014.  The development and construction of the entertainment site will provide a host of new jobs, both temporary and permanent.  The project will revive Downtown Sacramento and bring some much-needed life and dollars to the City.

Further, the Kings’ ownership and the City of Sacramento will need to sell the existing Power Balance Pavillion and surrounding property.  The sale should spur new re-development in the Natomas area, which will include a mix of residential, commercial and retail uses.  Given the site’s central location in Natomas and its development history, the property’s sale should garner national attention and interest from developers.

Maloofs pledge to contribute $75 million upfront for new downtown arena

VIDEO: Does Arena Deal Have Council Votes?

VIDEO: Kings owners, Sacramento, NBA reach arena deal

Source: Ryan Long, Senior Marketing Consultant, (916) 784-3329 ext. 16

Central Valley Housing Market on the Mend?

Home sales are typically slow everywhere in December but some markets in the Central Valley showed signs of life at the end of 2011. According to Affiliated Appraisers, the median sale price for existing single family homes in the Bakersfield area was $132,000 in December 2011, up 9.6% over December 2010. The supply of active listings of homes for sale dropped 9.3%.  Foreclosures continue to significantly weigh on the market as bank-owned property accounted for roughly a third of the homes sold in 2011.

Investors for single family homes, who buy property to rent to tenants, are returning to the Central Valley, and made up roughly a third of home sales in 2011.  Some successful investors were able to “flip” property for a profit.  Affiliated Appraisers reported that 23 homes were “flipped” in the Bakersfield area since April 23 of 2011. 

Home prices have fallen a whopping 56% from the peak in June 2006 (current median home price is $131,500).  As long as banks do not flood the market with distressed product, home prices should remain somewhat stable in the coming months.

As a consequence to uncertainty in traditional financial investments like stocks and bonds, Central Valley investors have now turned to existing multi-family buildings. As banks continue to work through their single family detached REO inventory, this seems like a logical place to deploy capital. Occupancy rates are hovering around 90% for even for C and D level properties.  The Bakersfield area market had over 160 multi-family residential sales transactions in 2011.   However, it still makes little sense to develop new multi-family land at this point, as direct costs and fees are prohibitive.

Source: Jason Hepp, Senior Marketing Consultant, (661) 702-9080 ext. 14

2011 = 2012? Seeing Double in NorCal

2011 is gone and we now have upon us a fresh start to a new year (Ahh… deep breath).  But what does that mean for the housing industry?  The Land Advisors Northern California team is looking ahead, and is wary that 2012 might reflect more of what 2011 had to offer.

The Sacramento region is highly sensitive to State budget woes that will likely cut more jobs and hinder organic economic growth in the area.  Home prices appear to be on a downward trend, and foreclosure rates are still high.  A statewide court ruling last week that eliminated redevelopment agencies, threatens the revitalization of the Sacramento downtown area, and now two signature development projects may never see the +$80 million in redevelopment money they were scheduled to receive in coming years.

Among the doom and gloom, the general consensus is that a bottom in the housing market is within clear sight!   Local Northern California investors and developers can see more and more distressed opportunities ahead.  And while many public and private homebuilders remain on the land acquisition sidelines, and are still busy impairing projects that were purchased during the 2010 boom, they are optimistic that the market will gradually get better and home prices will soon start to appreciate.

Source: Ryan Long, Senior Marketing Consultant, (916) 784-3329

The American Dream… Renting in the Central Valley?

As the Central Valley land and homebuilding market continues to slog through foreclosures, short sales, and tepid new home sales, many potential homebuyers are waiting out the current real estate cycle until real signs of economic growth emerge.  

  • According to Affiliated Appraisers, the median sale price of a single family home in Kern County rose 0.8% to $132,000 from September to October this year, but decreased by 2.2% year over year.
  • The number of foreclosures dropped 9.9% from September to October of this year, and is down 36.1% since October 2010.
  • October saw 522 closed homes sales (new and resale) throughout the County, down 11.4% for the month and off 7.1% for the year.
  • Properties owned by lenders account for 40.5% of all sales compared with a national average of 30.1%.

Due to the lack of confidence in the economy and homebuilding market, many would-be homebuyers are now turning to renting instead of buying.  According to RealFacts, many potential buyers with good credit who can afford to purchase a home now are electing to wait on the sidelines, and rent an apartment or townhome for a while instead.

Indicative of demand, average monthly rent in Kern County rose 2.8% in the third quarter 2011. The County had the 16th highest rent of 24 metropolitan statistical areas in California.  Its 98% occupancy rate earned it the State’s No. 4 spot on occupancy.  Over the last 3 quarters, rent for two-bedroom townhomes in Kern County increased by 10.7% compared to the previous three quarters.

Kern County is following a pattern typical of inland communities and other tertiary markets… They tend to be the first to collapse and the last to recover.

Source: Jason Hepp, Senior Marketing Consultant, (661) 702-9080 x14

Slow as Molasses in Ventura County

Land development activity is still slow and sticky in Ventura County, as very few land deals have traded hands in the coastal county in recent months.  Landed shared back on September 29th that home buyers are drawn to the region’s beachside lifestyle, but the County’s restrictions on new developments create a very supply constrained and difficult development environment for homebuilders.

In a recent article for HometownStation.com, a representative from the Los Angeles/Ventura Chapter of the Building Industry Association of Southern California said, “The weakness in single-family construction, which historically has been more consistent than multifamily projects, is further proof that local governments need to work more closely with homebuilders to allow projects to pencil out.”   

The same article reported that 458 multi-family units and only 116 single-family homes were permitted in Ventura County during the first nine months of 2011.

Eighteen single-family home permits were issued in Ventura County in September, compared with two in August and 14 in September 2010. Those homes are being built in Fillmore, Oxnard, Ventura, Simi Valley and unincorporated areas.  Oxnard leads Ventura County in housing starts with 337 year to date, which is by far the most in the County. 

Lenders served 1,535 notices of default in the third quarter in Ventura County, slightly down from the same period last year but up 35.3% from the second quarter.  669 homeowners in the County lost their houses or condominiums in the past three months.

A total of 772 new, condominium and resale homes were sold in Ventura County in September, at a median price of $349,000. This price is down from $355,000 in August.

Source: Michel Faris, Marketing Consultant, (949) 852-8288 x14

1.21 Gigawatts?! Trying to Get Back to the Future in Fresno…

It seems as though the Fresno residential land market is revisiting its past… residential raw land is currently selling for prices paid back in 2000.  During the market peak five or six years ago, unimproved vacant land in “A” locations sold in Fresno for $300,000 per acre.  Today it’s going for prices ranging from $60,000 to $85,000 per acre.

Local homebuilders are in the early stages of reloading their land inventory.  Housing Capital is playing a huge part, as the lender is one of a few banks enthusiastic to offer A, D and C loans.

Recent Land Deal:  Homebuilders are buying un-entitled dirt again but in smaller bites.  A local builder just purchased 10 acres of unimproved land in the heart of northeastern Fresno.  

Fresno local homebuilder Granville Homes is knocking the dust off of Westlake, a master planned community in west central Fresno that has been “mothballed” for the last five years.  The 430-acre project is now scheduled to break ground sometime in 2012.  Westlake is a promising master plan by a talented local builder.  This could spur a land rush from builders and developers alike looking to ride the coattails of this new community now anchoring West Fresno.

According to Fiserv, a financial analytics company, Madera is on the mend…  Fiserv identified Madera (about 25 miles northwest of Fresno) as a “winner” in a long list of sub-markets around the U.S. in terms of housing valuations.  The Chicago Tribune article states that home values across the Nation are anticipated to decrease in the coming year, but that home values in the Madera area will gain 15.5%!

Fresh from the FresnoBee.com News Blog… the number of foreclosures in the Central Valley fell during the third quarter of this year compared to the same time a year ago.  However, building permits are way down. In Fresno, only 19 single-family permits were pulled in September compared to 113 in August, and 120 permits a year ago at the same time. …Adapting to changing demographics and consumers’ needs, Lennar Homes rolls out a new model in the Central Valley.

So, despite Fresno residential land values resetting to decade lows, Land Advisors is looking to blast a few gigawatts into the market with two large Fresno area listings in early November – stay tuned!

Source: Mark Utman, Marketing Consultant, (559) 449-4500

Two Homebuilders Walk into a Bar…

We couldn’t think of anything either… But here’s an update on San Bernardino & North Central Riverside Counties:

San Bernardino & North Central Riverside Counties currently have 49 actively selling projects, up 67% from 2008, when there were only 16 actively selling projects. (Source: Hanleywood)

  • K. Hovnanian takes the lead with 6 actively selling projects
  • The majority of active homebuilders in this sub-market have two actively selling projects. 

Rental rates have increased 2.2% in the San Bernardino-Riverside-Ontario Metropolitan Statistical Area (MSA) since October 2010

Clarion purchased 3 multi-family properties for a combined price of $100 million and a total of 586 units.

  • The largest property was a 264-unit complex in Rancho Cucamonga called Village on the Green Apartments.  This complex sold for $43 million.
    1. The complex is surrounded by fairways of Empire Lakes Golf Course and is within close proximity to Victoria Gardens and Ontario Convention Center.
    2. Article link: http://www.rentv.com/content/homepage/mainnews/news/14883

Number of Inland Empire foreclosures DECREASE:  Foreclosure filings in San Bernardino fell nearly 17% from August to September 2011, while national foreclosure activity increased by less than 1 percent from Q2 2011 to Q3 2011.  (Source: San Bernardino Sun Staff Report)

Source: Doug Jorritsma, Senior Marketing Consultant, (949) 852-8288 x13, and Winn Galloway, Marketing Consultant, (949) 852-8288 x27

Lights… Flashing… Several High Profile Sites Trade Hands in SD County

The San Diego residential land market continues to plod along.  Most offerings are receiving strong interest as the building and development community looks for future inventory.  The general consensus is that the key indicators show stronger markets in the near future and everyone is filling their near-term pipeline (2012-2015).  Land Advisors recently completed the marketing campaign for The Lakes, a 248-lot project in the Rancho Santa Fe area.  The offering received strong interest from around the Nation.

Other notes from around the region…

  1. Meritage Homes made its first entry into the San Diego market with a purchase of 92 semi-finished lots in Oceanside, CA.  The property known as Hi Hope Ranch has a controversial past including lawsuits with the adjoining neighbor, Vista Unified School District, and a bankruptcy.  The property has been on the market for over a year and had been under contract with several builders.  The purchase price was reported to be just over $10 million.
  2. Another high profile Oceanside property also closed escrow.  MG Properties purchased Ocean Village, a “broken” condominium project near the Oceanside City Hall.  According to reports, none of the 33 units in the project were sold and the new owners will be leasing them out as apartments until the market firms.  The purchase price was $11.75 million which should allow the new owners ample room for profits, according to sources familiar with the project.
  3. Proving that you never know where the buyer will come from, a high profile 18-acre infill site in Mission Valley known as West End was purchased at a foreclosure auction last week.  The Buyer, Plaza del Sol Real Estate Trust is believed to be a church group looking for a new campus.  The site had been planned for 490 multi-family units but the project was never approved or developed due to the weak market in 2007-2010.  It is currently occupied by Mission Valley Inn and Frogs Gym.
  4. HOUSING:  According to the experts, foreclosures and defaults were down in September.  Hopefully this signals the start of an orderly process of unwinding the remaining problem properties still in the system, and tempers the uncertainty of prospective buyers:  www.nctimes.com/blogsnew/business/realside/article_fd80ea2f-890c-56bb-8231-d5d4231b30fa.html
  5. Look for new multi-family listings from the San Diego office of Land Advisors Organization in the next few weeks.
  6. Redevelopment of an eyesore in Solana Beach is in the works after American Assets bought a former trailer park on Coast Highway.  The 1.76-acre site at 329 S. Coast Highway finally traded hands at 63% of the original listing price after being on the market for several months.  The Buyer plans to redevelop the site for commercial/residential use.

Source: David Landes, Senior Marketing Consultant, (858) 568-7428

Santa Clarita Valley Economic Snapshot: IMPROVING

Santa Clarita Valley Economic Development Division’s Economic Snapshot report for July indicated that the Santa Clarita Valley (SCV) local economy is doing better than many of its surrounding communities.  Housing prices are moving UPWARD, and the local unemployment is around 8%.  Notice of Defaults recorded between July 1010 and July 2011 dropped 32%.  Read more: http://www.the-signal.com/section/24/article/52558/

SALES STATS: Q3 2011, Santa Clarita Valley (Source: Hanley Wood)

Detached Product

  • Regular Resale: Average Sale Price $435,450; Average Price/SF $195; Closings 394
  • REO Sale: Average Sale Price $339,079; Average Price/SF $169; Closings 121
  • New Home Sale: Average Sale Price $475,857; Average Price/SF $191; Closings 42
  • Foreclosures: Closings 198

Attached Product

  • Regular Resale:  Average Sale Price $240,126;  Average Price/SF $177;  Closings 182
  • REO Sale:  Average Sale Price $182,178;  Average Price/SF $155;  Closings 88
  • New Home Sale:  Average Sale Price $465,167;  Closings 9
  • Foreclosures:  Closings 137

Building permits are still hovering at incredibly low numbers these days in the SCV.  According to a recent Santa Clarita Signal article, most of the SCV’s building permits requested are for single family units.  This differs greatly from neighboring sub-markets where multi-family activity is booming.

Builders and developers are still waiting for lower development fees in the Santa Clarita Valley.  They are having a difficult time finding residential land deals that make sense given the current economic environment. (Development impact fees are currently averaging approximately $50,000 per lot.)

Source: Michel Faris, Marketing Consultant, (949) 852-8288 x14

South Central Valley: “Hold on Tight!”

2011 began with renewed optimism that California’s Central Valley residential land market would improve and home sale prices would begin to stabilize.  As Q2 rolled around it became evident this optimism may be short-lived.

In 2011 the Central Valley sub-market (including Kern, Kings, Madera, and Tulare Counties) has seen a slight decrease in foreclosure and REO sales (currently at 32% and 28% respectively); yet new home sales continue to lag far behind at a little over 5% of total sales.

Tertiary markets (including the cities of Arvin, McFarland and Wasco) which traditionally attract builders who utilize government subsidies for potential home buyers are experiencing extended wait periods, or are unable to obtain financing altogether.

Most public homebuilders and larger regional builders have left the valley or “shelved” their projects until the market shows real signs of recovery.

However, there are investors and developers with long-term horizons looking for land/lot opportunities and have been successful in closing transactions throughout the South Central Valley.

Source: Jason Hepp, Senior Marketing Consultant, (661) 702-9080 x14

Sacramento Region Catches a Glimpse

Northern California Report:

  1. Market experiencing more downward pressure on pricing. 
  2. New home sales are poor. 
  3. Most public homebuilders are not looking in the Sacramento region at this time.
  4. The Sacramento Region sub-market (including Sacramento, Placer and El Dorado Counties) has an abundance of developable, yet unavailable, residential lots.  Most of the finished lots in the area are controlled by the public homebuilders. Very few are distressed.

Glimpse of light: A few of the Bay Area secondary markets (a.k.a. the “commuter” markets), particularly the community of Mountain House, are starting to show signs of a comeback, which hasn’t happened in roughly 4 years. 

Source:  Jim Radler (916) 784-3329 x11, Senior Marketing Consultant for the Sacramento region sub-market