Land Prices Are Not the Only Thing Rising….

Ever heard of someone saying “when things are on a roll…enjoy it while it lasts, ‘cause it never does.” Well, I guess you could apply the same logic to interest rates.

Looking at how the tear land values have been in the last 12 months, it seems things are starting to cool off and the industry is taking a collective breath.  When the Federal Reserve Chairman speaks and hints at future actions regarding interest rates, the market is clearly listening.  In case anyone missed it, interest rates have risen for the better part of 100 basis points since May causing new home sales to slow and robbing buyers of purchase power, which illustrates that the housing recovery is still fragile and changes need to be addressed delicately as we move forward.  That being said, I think home buyers are realizing that low-interest rates will not last forever and they should engage while they can.

Link: http://blogs.wsj.com/developments/2013/07/16/rising-mortgage-rates-home-builders-shrug-them-off/

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

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FRESNO: Fat Tuesday, Skinny Inventory

Now is the time for homebuilders to open their stalled legacy projects. Beazer Homes recently closed out The Groves at Sunnyside Point, their neighborhood adjacent to KB Home’s Olive Lane new home community located in Sunnyside Fresno. New homebuilders will not have to compete as hard for new home buyers shopping the area.

HOME PRICES
According to the California Association of Realtors, Fresno County home prices increased 15.3%, but sales were down 22.2% from the previous year. Madera County saw prices increase 36.1%, but sales were down 24.4% from the previous year. However, sales are looking up with a 19.2% increase in sales from the previous month in Madera County.

December 2012 County Sales and Price Activity

Median Sold Price of Existing Single-Family Homes

# of Sales

County

12-Dec

12-Nov

11-Dec

MTM% Chg

YTY% Chg

MTM% Chg

YTY% Chg

Fresno

$157,620

$148,240

$136,740

6.3%

15.3%

-2.5%

-22.2%

Madera

$144,290

$113,330

$106,000

27.3%

36.1%

19.2%

-24.4%

Source: California Association of Realtors

UNSOLD INVENTORY & TIME ON MARKET
According to Land Advisors Organization research, unsold inventory in Fresno County decreased 7.3% from the previous year and Madera County decreased 47.4% from the previous year. The median time on market decreased 24.1% in Fresno County and increased 25.4% in Madera County from the previous year.

December 2012 County Unsold Inventory and Time on Market

Unsold Inventory Index

Median Time on Market

County

12-Dec

12-Nov

11-Dec

12-Dec

12-Nov

11-Dec

Fresno

3.8 Months

4.2 Months

4.1 Months

26.4 Days

26.3 Days

34.8 Days

Madera

2 Months

3.2 Months

3.8 Months

64.6 Days

27.9 Days

51.5 Days

Source: California Association of Realtors

FINISHED LOT INVENTORY
Home Buyer demand is escalating fast.  Quality resale inventory is sparse.  If you own 10 or more acres of land in the path of development, you should be at the City processing a subdivision map faster than Mardi Gras beads flying from a balcony overlooking Bourbon Street.  If you are not familiar with the entitlement process please contact me so I can help get you started.

NEW DEVELOPMENT
Fresno developers plan medical campus at Millerton Lake. FULL STORY

Source: Mark Utman, Marketing Consultant, (559) 549-6326

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

Fresno County Approved TTM Lots Going Once, Twice…

Land Advisors Organization is pleased to say SHOUT! the handful of approved tentative tract maps (TTM) available for sale within Clovis’ city limits have been receiving multiple offers.  The City of Fresno is next to follow where lots previously located in “B” and “C” locations are quickly becoming the new “A” lots.   The time is now for developers and homebuilders to pounce on every reasonably priced TTM.  Call LAO’s Fresno office at (559) 549-6326 for a current list of available inventory.

POLL:  

HOME SALES:

  • Distressed homes sales are on the decline. FULL STORY
  • Home prices are up 18% from a year ago. FULL STORY

NEW DEVELOPMENTS: On November 7, 2012 The Madera County Board of Supervisors re-approved 4-0 the 1,656-acre, 5,190-home Tesoro Viejo planned urban community proposed by McCaffrey Group.

Source: Mark Utman, Marketing Consultant, (559) 549-6326

Central Coast: Full Sails Again for Santa Barbara Realtors

Spring flowers are blooming, the Pacific Ocean breeze is blowing, and South Santa Barbara home sales activity is picking up!  Central Coast resale agents are finding themselves busy again.  Traffic, escrows, listings and pricing in certain areas are all up, kicking the Central Coast’s spring selling season into gear.

The Beautiful Santa Barbara Real Estate Blog reported… Santa Barbara Real Estate through the end of March ‘12 for Montecito, Hope Ranch, Santa Barbara, Goleta, Carpinteria and Summerland:  Comparing the first 3 months of 2011 with the same period in 2012, sales are up about 35% with escrows up over 50% and the median sales price is up bit while the average sales prices is down a bit. Year-over-year the Sales Price to Original Price ratio is within 2% of where it was last year and the Days on the Market for sold properties is within 12 days of where it was in 2011.

An example of the Central Coast’s uplifting sales activity is City Ventures’ East Beach Collection in Santa Barbara.  The 48-unit attached townhome project is seeing impressive sales, with only 5 more to go before completion.  The project has sold 15 homes in 2012 (5 per month!).  The City Ventures marketing team attributes the strong homebuyer interest to the project’s unique location, quality product and the limited supply of new product currently available in the marketplace.  The East Beach Collection is four blocks from Santa Barbara’s famous State Street and four blocks to the ocean.  With no amenities and surrounded mostly by office buildings, the project is in the new hip, up-and-coming area (also referred to as the “funk zone”).

Source: Matt Power, Senior Marketing Consultant, (805) 845-2660

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.