SACRAMENTO EMPLOYMENT NUMBERS GETTING BETTER

Now that the election is over, everyone in the homebuilding industry can take a collective deep breath and get back to work.  In spite of our worst fears about policy failures, taxes and over regulation, new homes are selling in the region and selling well.  Even before the election, anxiety over the housing market seemed to be subsiding while confidence growing.  There are many factors including supply shortages, interest rates, and relative affordability but most notable, have been  the employment numbers for the Sacramento region.  They have finally dipped below the double digit level and it has provided a boost for the region so severely squashed by the residential market downturn.  If the trend continues on the employment side, look for positive growth in new housing no matter what our government looks like.

http://www.bizjournals.com/sacramento/news/2012/10/19/area-unemployment-dips-single-digits.html

http://www.bizjournals.com/sacramento/blog/sanford-nax/2012/10/job-market-improves-in-some-professions.html

http://www.builderonline.com/legislation/what-obamas-re-election-means-for-housing.aspx?utm_source=newsletter&utm_content=jump&utm_medium=email&utm_campaign=BBU_110812&day=2012-11-08

Source: Jim Radler, Senior Marketing Consultant, (916) 784-3329 ext. 11

Sacramento: Where’s the Dirt?

The Sacramento region finally appears to be emerging from the homebuilding doldrums.  Over the last several months, homebuilders seem to have a new found confidence as new home absorption levels have begun to tick up to levels not seen for several years.

Pricing on the other hand, is still lagging with maybe a small bump in appreciation.  All of this said, ready-to-build lots are becoming scarce within the Sacramento submarket, and at this rate, some areas could possibly end 2013 with a lot supply of zero.

The key drivers to getting builders back to Sacramento will be continued increased scarcity of deals in the San Francisco Bay Area, in addition to sustained new homes sales that we have seen in the area over the last several months.

The Wall Street Journal recently reported that the recent rise in homebuilding could be thwarted by an unlikely factor, a shortage of land in desirable locations.  Homebuilders are realizing they cannot focus strictly on the Bay Area locales just due to the fact that high land prices and land scarcity will forbid them from ramping up deliveries and allowing them to grow organically.  If they want to be able to produce new home delivery volume, they will have to start looking in the Sacramento region as well as some parts of the Central Valley.  If and when they move eastward, we will start to see homebuilders look at “paper” lot or entitlement deals, where in the past they were only focused on finished lots.  Time will tell.

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

Window of Opportunity in Ventura County

Land Advisors’ Ventura County Team (comprised of Michel Faris, Randy Coe, and Richard Byrd) are pleased to offer an exciting new listing in the Ventura County submarket. The new ±8-acre listing, known as Northbank Meadows is a rare multi-family development opportunity in the highly desirable yet extremely supply constrained City of Ventura.

Historically, homes within Ventura County are highly sought after by homebuyers because of the County’s easy-going, high-quality beach lifestyle, in addition to its proximity to L.A. County job centers. Longstanding development constraints have kept Ventura County from over-development.  Amid the slow growth, land values in the submarkets are holding steady and homebuilders and developers are taking another glance at opportunities in the area as the macroeconomic environment improves.

County Home Sales Up; Median Price Falls via VCStar.comVentura County home sales increased slightly last month, while median prices continued to drop despite record-low mortgage rates… DataQuick reported that 561 homes sold in Ventura County in January — an increase of 2% compared with the same time last year. The sales include new homes and resold single-family homes and condos.  DataQuick also reported the median price of homes in Ventura County at $322,500, a 7.9% decrease compared with the same time last year. Read more

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

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

Two Steps Forward, One Step Back on the Central Coast…

As the New Year begins, the California Central Coast is preparing for homebuilding activity in some areas, and inactivity in others.  The good news is that this sub-market will see two new home communities open this year. 

The first to open is Lagunitas, in the quaint beach side town of Carpinteria, one of south Santa Barbara County’s most desirable areas.  Lagunitas is located adjacent to the north side of Highway 101 and is within close proximity to the beach and shopping opportunities.  The master plan will offer three different product types, ranging from 1,360 to 2,421 sq. ft., aimed at appealing to a wide range of home buyers.  Private homebuilder MD2 Communities has already broken ground and is currently forming an interest list.

The second new home community opening in 2012 along the Central Coast is the first component of the Margarita Specific Plan in the City of San Luis Obispo.  MD2 Communities will bring 177 single family homes, an affordable housing site and 16 small-scale commercial opportunities to fruition.  The new homes are planned to range from approximately 1,500 to 2,000 sq. ft., with the majority of the product types consisting of single story plans.  Model homes should be completed in the first quarter of 2012.

Other parts of the Central Coast are not seeing as much forward progress.  In September, Goleta’s City Council rejected a zoning change for the controversial Bishop Ranch housing project.  Bishop Ranch was initially proposed for 1,200 homes, 90,000 feet of commercial space and 67 acres of park land, but the developer withdrew the application at the last minute.  The second attempt with the City, which was unanimously rejected, was a request for the zoning designation to be changed from Agricultural to Mixed Use Urban.  Either way, it looks like the plans for Bishop Ranch are one step back for the moment.

Overall, the Central Coast in 2012 will provide superb opportunities for homebuilders, developers and investors to pick up strategic land positions in a traditionally supply-constrained market in anticipation of what is broadly expected to be a rising new home market in the next few years.

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

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