15TH ANNUAL SURVEY OF RESIDENTIAL BUILDING : Builders Set 4 Records; '85 Home Sales Soar 47%

Times Real Estate Editor

Four records were set in The Times' 15th annual Survey of Residential Construction and Sales Activity, indicating the strength of the housing market throughout Southern California.

The highest number of builders--144--were ranked in the survey from among a record 154 respondents whose 1985 sales volume reached 189.1 in the index of median sales, while sales projections for this year hit the 195.3 mark.

The 1971 median sales and the 1972 median sales projections--both from the first survey--equal 100 and provide the index for annual comparisons. (See chart.)

Sales in 1985 represented a 47.4% jump over 1984, and anticipated sales this year represent the highest projected index since the survey began. The previous high was 157 in 1985.

Builders, through the data submitted in the voluntary survey and in their comments, expect a continuation of the upward trend throughout the seven-county survey area of Los Angeles, Orange, San Diego, Riverside, San Bernardino, Ventura and Kern counties.

Significantly, information for the survey was submitted about a month before interest rates dropped dramatically, breaking into the single-digit zone for home loans and spurring activity in home sales.

Since early March, fixed-interest rates have slipped under the 10% mark, creating a flood of inquiries to lending institutions by persons interested in buying or refinancing homes.

Lender representatives said some loan processing personnel had backlogs of as many as 200 phone calls.

One builder described his expectations for this year as "controlled optimism." Almost all comments attached to survey forms were upbeat and very positive about the housing market for the remainder of this year.

For some firms, 1985 was their best year ever; others indicated it was a solid year of business and speculated that this year might be better--"rosy through at least the third quarter."

Reflecting some caution, 139 of the 144 ranked firms that offered projections for sales during 1986, predicted an increase in sales of 29.4%, compared to the 43.1% gain hoped for last year by 129 company spokesmen.

Residential sales totaled $5,294,800,000 for the 144 firms. That was an increase of 36.7% over the 1984 figure of $3,872,500,000 for 131 builders.

Watt Industries Inc. of Santa Monica, headed by veteran builder-developer Ray A. Watt, was first, with 1985 sales of $283.5 million. In last year's survey, the firm ranked second behind the William Lyon Co., Newport Beach, survey leader for four consecutive years.

Lyon dropped to third place in the present survey with a sales volume of $204.7 million, behind runner-up CoastFed Properties of Beverly Hills, which had $271.6 million in sales. CoastFed was ranked fourth last year.

Watt had 1984 sales of $173 million and exceeded its 1985 sales projections of $250 million by $33.5 million. The company built 1,878 units last year; 45.4% were single-family dwellings, 33.2% were condominiums and 21.4% were apartments.

Of the 139 firms reporting 1985 sales and 1986 projections, 84.9% (118 firms) expect an increase in sales volume this year, down just slightly from the 86% of 129 companies in last year's survey which expected increases.

Brookshire Homes, Newport Beach, 141st in the ranking, is anticipating the largest percentage in sales--1,671.4%, from $700,000 (rounded figure) in 1985 to $12.4 million this year.

CoastFed Properties, ranked second, expects the largest dollar volume increase, $110.4 million, from $271.6 in 1985 to $382 million this year.

During 1985, 139 builders produced 52,086 housing units. Five of the 144 firms reporting sales for 1985 did not build any units during the year but sold previously built homes. They were Casa Linda Development Corp. of Long Beach, ranked 142nd; Colonial Construction Co. of Pasadena, 138th; Cottage Development of Fullerton, 135th; Manuelli & Stratton of Sierra Madre, 143rd, and Tuttle Development of Costa Mesa, tied for 138th place.

Total 1985 construction was up 42.2% over 1984. Single-family units built last year reached the 22,188 mark, representing 42.6% of the total which was down slightly from the corresponding rate of 43.5% reported in 1984.

Fleetwood Enterprises of Riverside, ranking 44th, reported the largest number of single-family homes built--1,837--but they were all manufactured housing units. Kaufman & Broad Development Group of Los Angeles, ranking seventh, built 1,247 single-family homes, representing all of its output. (Kaufman & Broad had only participated once before, in 1977, when it ranked 17th as Kaufman & Broad Homes Inc.

A total of 98 firms built single-family homes, representing 70.5% of the 139 firms with any building activity last year, compared with 72.9%, or 94 firms in 1984.

While ranking 143rd--next to last in sales for 1985--Lincoln Property Co. of Huntington Beach was the leader in apartment unit construction, with all of its production in such units totaling 2,962.

Fifty-one developers, or 36.7%, reported building activity in the apartment field last year, compared to 33 firms or 25.6% in 1984.

The leader in condominium construction was First Financial Group of Encino, ranked 24th, with 839 units; total condominium output for 1985 was 11,727 or 22.5% of all new construction during the past year. The 1984 percentage of the market was 30.3%.

There were 84 firms, or 60.4%, of the total survey respondents involved with condominium construction, down slightly from the 85 firms representing 65.9% in 1984.

Of the 139 firms making projections for l986, 75.7% plan some activity in single-family homes, 51.4% plan to build apartment units and 53.6% are planning condominium construction. Twenty-six, or 18.6%, of the builders, plan to be active in all three housing segments.

At the end of 1985, there was an inventory of 6,103 built but unsold housing units, the survey showed. The corresponding figure in 1984 was 4,548. As of Jan. 1 this year, 46 firms had no inventory. The Sickels Group of San Diego, apartment builder, ranked as 20th, had the largest unsold backlog--2,100, and Lewis Homes of Upland, ranking sixth, was second with 334.

The median for actual 1985 sales for the 144 firms reporting sales was $17.4 million, while the median projection for the 139 firms predicting sales for 1986 was $25 million.

For 103 firms which participated in the 1984 and 1985 surveys, there was a gain of 23.8% in sales, from $3,521,000,000 to $4,358,600,000, respectively. Sales increased for 70 firms and declined for 31, and two companies remained unchanged.

Brokerage Development Corp. of Long Beach, ranked at 133rd, enjoyed a 1,150% gain between the years while Lincoln Property Co. experienced the largest percentage drop, 99.8%.

Of the 103 firms participating in the last two surveys, 30, or 29.1%, exceeded their projections. Green Venture Homes of Pacific Palisades, ranked 66th, showed the largest percentage gain (203%) over its projected figure. It had actual sales in 1985 of $20 million but had projected $6.6-million. Lincoln Property had 1985 sales of $229,100 but had predicted $164.5-million, a variance of 99.9%.

During 1985, 40,526 units were built for sale, up 22.4% from the 1984 total of 33,119 for the 103 firms. Two-thirds of the firms built more units last year than they did in 1984.

Cayman Development Co. of Rolling Hills Estates, ranked 32nd, and Spielman-Fond-Cohen Builders of Beverly Hills, ranked 77th, had the largest percentage gain in number of units--seven in 1984 to 124 in 1985, up 1,671.4% for each firm. Lincoln Property had the largest numerical gain, with 1,687 more units in 1985 than in the previous year.

Registering the largest percentage drop in number of units built from 1984 to 1985 was Baywood Development Group of Newport Beach, ranked 110th, with 77.8%. Sunrise Co., ranked 12th, reported the largest numerical decrease, with 315 fewer units in 1985 than 1984.

Twenty-two firms or 15.3% of the participants plan to build units equipped with active solar energy systems in 1986. A total of 1,800 such units are planned, 16.5% for single-family homes, 71.4% in apartments and 12.1% in condominiums. Calmark Development Corp. of Los Angeles, ranked 47th, projects the largest number of solar-equipped units--830, all in apartments planned for construction this year. Other builders have plans for more than 816 solar-energy pools and spas during the year.

Five firms, Barclay Hollander Corp. of Thousand Oaks, ranked 76th; Fleetwood Enterprises, Kaufman & Broad Development, Peacock Enterprises of Santa Ana, ranked 120th, and T & S Construction of Pasadena, ranked 130th, built a total of 2,050 manufactured housing units last year. In 1984, seven reporting firms built 707 such units.

Only Peacock projected any activity, anticipating to build 23 manufactured housing units in 1986.

Two participating builders mentioned mobile home activity in the survey. Kaufman & Broad Development Group reported a combined number of 1,058 manufactured housing and mobile homes in 1985. Michael Development Corp. of Palm Desert, ranked 138th, projected 142 mobile homes for this year.

As usual, there were a number of firms whose survey data reached The Times after the Feb. 12 deadline, announced about a month in advance. Some firms submitted incomplete information or data for areas not covered in the survey.

Six firms returned survey questionnaires but had no 1985 sales to report and could not be ranked.

INDEX OF MEDIAN AND PROJECTED SALES VOLUME Southern California firms participating in the Times' 1972-1986 residential building survey.

Graph shows comparison between sales volume (solid line) and sales projections (broken line) since start of Times Survey of Residential Construction and Sales Activity. See sales volume index on Page 10. Above, construction workers raise frame during construction of a San Diego condominium complex developed by CalMat Properties Co. of Los Angeles., MICHAEL HALL / Los Angeles Times

Source: "residential Building in Southern California" Los Angeles Times Marketing Research Department, 1972-1986.

Index of Median Sales Volume and Projected Sales Volume in Southern California for Firms Participating in The Times' 1972-1986 Residential Building Surveys

Sales Volume Sales Projections (1971=100.0) (1972=100.0) 1971 100.0 1972 100.0 1972 104.3 1973 97.7 1973 97.8 1974 89.8 1974 85.9 1975 78.1 1975 76.1 1976 81.3 1976 105.4 1977 142.2 1977 141.3 1978 156.3 1978 144.6 1979 151.6 1979 144.0 1980 140.6 1980 142.4 1981 125.0 1981 91.3 1982 78.1 1982 80.4 1983 96.1 1983 83.7 1984 140.6 1984 128.3 1985 157.0 1985 189.1 1986 195.3

Zeros Added, Firm Moves Up Los Angeles Times Sunday March 23, 1986 Home Edition Real Estate Part 8 Page 2 Column 1 Real Estate Desk 6 inches; 189 words Type of Material: Correction For the first time in the 15-year history of the Times' annual Survey of Residential Construction and Sales Activity, there is an asterisk winner among the top home-building firms in Southern California. Lincoln Property Co., based on figures submitted on the survey form, had tumbled from 14th place in the 1984 ranking to 143rd place in 1985--next to last--in the survey results published here March 16. A chagrined company official told The Times on Monday that data reported by the Huntington Beach firm was incorrect, having omitted six very important zeroes. Actually, he said, citing an embarrassment of riches, Lincoln had sales of $229,100,000--not $229,100--in housing units sales last year, and predicted its 1986 sales projection to be $169,900,000--not $169,000. The corrected figures would rank Lincoln in third place--with an asterisk--ahead of the William Lyon Co. of Newport Beach, survey leader for four consecutive years, which reported $204.7-million sales for 1985. The 2,962 apartment units built by Lincoln represented its total construction output, making it the survey's largest apartment builder. Watt Industries Inc. of Santa Monica, with total sales of $283.5-million, and CoastFed Properties of Beverly Hills, with sales of $271.6-million, headed the list of major builders above the $200-million mark.
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