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

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