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

New Conforming Loan Limits Create Uncertainty in California’s Bay Area

Uncertainty remains high in the Bay Area residential land market following the drop in conforming loan limits to $625,000 from $729,000.

The Bay Area has 72 sub-markets (by Zip Code) where the median home price is now above the new conforming loan limit. What affect this will have on the recovery of the Bay Area housing market is still unknown. Chances are that the compression in loan limits will ultimately correlate to a compression in home prices although not necessarily on a dollar for dollar basis, and the affects could be widely different based on sub-markets.

Currently true “jumbo” loans are priced approximately 100 basis points above “jumbo conforming” loans. Assuming a $626,000 loan and jumbo rate of 5%, a potential home buyer keeping their monthly payment the same will lose approximately $150,000 in buying power.

This phenomenon is most likely to affect the market in the $800,000 – $1 million price point range.  The buyers of these homes would have formerly qualified for a “conforming jumbo” loan if they were putting down at least 20%.  However, they now will need a much larger down payment to stay under the new conforming limits.

At price points above $1 million we would expect there to be a smaller impact, as buyers in that price point have always had to get jumbo loans or put down substantial down payments.

Click the link to see a table outlining the Bay Area sub-markets by zip code with median prices above $625,000: http://www.dqnews.com/Charts/Monthly-Charts/SF-Chronicle-Charts/ZIPSFC.aspx

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

W. Riverside County: Multi-Family Land is Hot…Or Not?

Market Activity – Closed Deals: (Single Family Detached):  Two significant land transactions have closed escrow in the West Riverside County (WRC) sub-market within the last 30 days. In both cases, the buyer was not a public homebuilder. Active buyers in the land market are private investors seeking well-located paper lot and entitlement opportunities and are very bullish in the Cities of Temecula, Murrieta, French Valley, Moreno Valley and Corona.

Public homebuilders remain quiet and are focused on selling through projects they purchased in 2010. However, one public homebuilder does have two sites under contract in Temecula.

A number of other residential projects are currently in escrow in WRC and Land Advisors is on track to close two transactions by month’s end.

On The Market: (Multi-family – For Rent):  Two prominent apartment development sites are available for sale.  Both sites are well-located within the City of Corona.  Apartment land interest and perceived value remains optimistic.  However there have been few sales to justify this optimism. Land Advisors did list and sell Magnolia Village last year which remains the highest comparable apartment land sale in the market.

Building Permit Activity:  In Riverside County last month, builders obtained government permits for 473 units, (257 single family homes and 216 multi-family units – a majority of which are apartments). This is an increase from August which saw permits at 329 units (Source: Press Enterprise).

Source: Mitch Casillas, Marketing Consultant, (949) 852-8288 x23

Who’s Buying Lots in the South Central Valley? Locals, That’s Who!

There’s an old saying that a land market bottom (or other markets for that matter) is defined at least in part by an absence of bona fide buyers. And while it has certainly seemed that way recently as the land market has been pretty quiet in the second half of the year, an interesting pattern is starting to emerge in California’s Central Valley.  Local investors, developers, and builders are judiciously re-entering the market and purchasing lots!  Some of these buyers are the same groups that sold out at the peak of the market, and are pocketing nice profits.

The perceived notion that the sky is falling and things will never get better is running rampant and some local buyers with the right long-term perspective are taking action now.

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

Lowered Development Fees and More Jobs Headed to the Northern Central Valley

Earlier this year, the City of Modesto lowered many of its development fees, including the one-time charges that pay for roads and other public facilities.  The City is lowering capital facility fees by 22% to 45% for residential and commercial projects. Read article: Modesto Bee

ECONOMIC IMPACT:  The University of California, Merced began initial operations in July 2000 and has since contributed approximately $650 million to the San Joaquin Valley economy.  With over 5,000 students currently enrolled, the City of Merced is becoming a hot spot for student housing development, and is anticipating more jobs in the horizon. http://ucmercednews.blogspot.com/2011/09/university-of-california-merced-has.html

Many residents of the Central Valley are looking forward to progress with construction of the proposed high-speed rail, which was approved in 2008.  This mega project is surrounded by loads of controversy, but is estimated to bring approximately new 83,000 jobs to the Central Valley. Read article: Central Valley Business Journal

EMPLOYMENT FACTOR:   As is the case in most homebuilding sub-markets across the country, homebuilders and developers in the Central Valley are eagerly awaiting decreased unemployment and increased consumer confidence, in hopes of jump starting new home sales.

California’s unemployment rate increased to 12.1% in August. However, with the summer growing season in full swing and harvesting of some crops underway, the jobless rates in the Central Valley dipped a bit in August.  Read article: Central Valley Business Times

Here are the August 2011 Central Valley unemployment rates, followed by those from July 2011, which are in parentheses. All are estimates: (Source: Central Valley Business Times)

  • Fresno County, 15.8%; (16.7%)
  • Kern County, 14.4%; (15.5%)
  • Kings County, 15.3%; (16.1%)
  • Madera County, 14.4%; (15.4%)
  • Merced County, 17.5%; (18.7%)
  • San Joaquin County, 16.1%; (17.5%)
  • Stanislaus County, 16.0%; (17.5%)
  • Tulare County, 15.7%; (16.6%)

Source: RJ Radler, Senior Marketing Consultant, (916) 784-3329 x12

San Diego County Land Prices Pushing UPWARD

Residential land prices in San Diego County are trending up!  Check out the San Diego Business Journal article this week, where Land Advisors’ Senior Marketing Consultant, David Landes, discusses the County’s residential (single family & multi-family) land trends. READ HERE: San Diego Business Journal Article

Public and private homebuilders and developers are showing strong interest in big residential projects throughout San Diego County.  Land Advisors is receiving a large number of inquiries from around the U.S. and abroad for the Lakes above Rancho Santa Fe, a 248-lot project in the Santa Fe Valley.

Heard on the Street: Davidson Communities, who has been building homes in the Carmel Valley corridor for nearly 30 years, is rumored to be under contract to sell a portion of its Fairbanks Country Villa project.

The San Diego South Bay market (Chula Vista) is starting to heat up.  Builders and developers are working on future residential projects in anticipation of an economic turn.

New home projects in Coastal San Diego are doing well.  City Ventures and K. Hovnanian have recently started building communities.  Look for sales flags in Leucadia and Carlsbad.

Multi-family product remains hot.  Watch for a few cities to start considering re-zoning land from industrial and commercial use to residential use.

Redevelopment funds: Builders and developers need to continue to pressure their politicians to fight for redevelopment funds which are threatened by Sacramento. This will have a big effect on future downtown San Diego development and potential relocation of the San Diego Chargers NFL team.

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

Lakers Game Anyone?

With all the negativity shared around the real estate industry these days, the California Division’s “Team SB” (known for its cheerful demeanor and rosy disposition) is pouring optimism from the half-full glass in this week’s Landed blog post:

  1. Despite volatile market conditions, single family lots are still trading to public and private builders in well-located sub-markets along the I-15 Corridor. Several properties zoned for residential use are currently in escrow in Fontana, Rancho Cucamonga and Eastvale/Dairylands.
  2. New homes sales are slow throughout San Bernardino County, however, a few communities are selling quite well. For example, Beazer Homes’ (BZH), The Enclave at Crafton Hills, located in Yucaipa, has sold 9 homes in the last two months. Land Advisors originally sold the Crafton Hills lots in “finished” condition to Beazer in late 2010.
  3. Beaumont has been one of Richmond American Homes (MDC), strongest selling sub-markets this year. The public builder’s two actively selling communities are Kensington at Tournament Hills (from low $200s) and Woodhaven (from the upper $100s).
  4. If there is in fact an NBA season (please God!), don’t miss the Lakers game at Citizens Business Bank Arena (next to Team SB’s multi-family listing: Piemonte at Ontario Center) on October 12th.

Team SB covers residential land activity in San Bernardino and Northwest Riverside Counties. For more information on this sub-market (or more cheery market insight), please contact Doug Jorritsma, Senior Marketing Consultant, (949) 852-8288 x13 and Winn Galloway, Marketing Consultant (949) 852-8288 x27.

Urban Infill: War and Peace in the LA Basin

The Land Advisors Urban Infill team is currently working with several developers who have recently submitted tentative tract maps, are revising existing tract maps, or intend to submit new tract maps for for-sale housing developments.  The Team is seeing the highest concentration of activity in Northeast Los Angeles (Echo Park, Silver Lake, Eagle Rock, and Glassell Park).

The City of Los Angeles Department of Building and Safety’s September newsletter revealed that the City’s number of housing starts year-to-date is still low (-31% YOY).  However, plan check revenue is up (41% YOY), indicating an upswing of future housing supply.  Newsletter Sept 2011

Ideally located new home communities selling well-designed homes are showing strong sales numbers. In the third quarter, the Urban Infill Team led the closing eight single family attached lots at Lennar’s Playa Vista. In response to the growing demand for additional product in Playa Vista, Lennar closed the 2nd and 3rd lot take downs four months early. 

Los Angeles Land Use Update:  The Planning Department’s Code Studies Section unveiled late last week a draft ordinance that would allow the creation of site-specific development rules that could loosen-up laws on density, setbacks and open space requirements. The new process, called Planning Unit Development, is part of the Department’s 3-year-old effort to streamline the Municipal Code while also encouraging more public participation. Some might say those goals are as congruent as war and peace. http://www.landusela.net/2011/09/planning-dept-unveils-latest.html

Source: Tim Barden, Marketing Consultant, (949) 852-8288 x30, and Richard Byrd, Senior Marketing Consultant (626) 376-9840 x13, and Chris Gomez-Ortigoza, Marketing Consultant, (626) 376-9840 x14

Who’s that Buyer in the Antelope Valley?

The most active buyers currently picking up land in the Antelope Valley right now are private investors who have been trading land in the sub-market for decades.  City Ventures recently closed on the 585-Acre Joshua Ranch in West Palmdale. No new deals have transacted in East Palmdale since February 2010.

Two Lancaster deals to note that were brokered by the Land Advisors’ High Desert Team in recent months:

  • The Reserve – 32 Finished Lots in West Lancaster
  • Falcon Point – 219 Finished and Semi-finished Lots in East Lancaster

Only a handful of residential land REO’s remain available for sale within the Antelope Valey sub-market.  Land Advisors currently has three of approximately the five total exclusive listings.

Development impact fees have held steady, with little or no change in rates in the City of Lancaster in 2011.

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