Home Builders Apprehensive About Next Year; Slow-Growth Movements Cited Among Obstacles : Caution Flag Up After Robust Years : Times Survey Attracts Record Participation

After three robust years of sales in the Southern California housing market, builders and developers expect 1988 to be a stable year, but they appear rather apprehensive about 1989.

The “specter” of expanding growth-control movements in many communities, as one major builder pointed out, can only stall and complicate matters in the housing marketplace, inevitably forcing up land and housing costs.

The 17th annual Los Angeles Times survey of Residential Construction and Sales Activity, attracting the largest participation since its first publication in 1972, measures the dollar and construction volume of single-family homes, condominiums and apartments throughout six Southland counties in 1987 and expectations for the same categories this year.

Based on an index created by The Times marketing research department, with 1971 median sales and the 1972 median sales projections equal to 100.0 in the first survey, sales last year reached the 262.1 mark, topping the 1986 record of 260.9. Even though the increase was small, it established a new high.

Voluntary Surveys

But sales projections in the index for 1988 fell slightly, to 210.2, down from the all-time high of 213.3 set in the banner year of 1987, indicating the close-to-the-vest attitude of most builders. The chart on this page illustrates the history of activity since 1972, showing the two cycles that peaked in 1978-79 and 1986-87.

Because the surveys have been voluntary, the number of participants varies annually. Therefore, the index allows for an overall trend comparison rather than a dollar comparison, which would not be meaningful.

The median for actual 1987 sales for 177 firms reporting sales was $24.1 million. The median projection for 171 firms projecting sales for 1988 was $26.9 million. (See index on Page 8.)

The William Lyon Co. of Newport Beach, regained its top ranking after after a two-year period, having dropped to third place in both the 15th and 16th annual surveys. Lyon had ranked first for four consecutive years until giving way to CoastFed in last year’s tabulations and to Watt Industries of Santa Monica in the 15th annual survey.

More Apartment Building

Lyon posted sales of $506,257,000, having produced 1,584 single-family homes, 1,572 apartment units and 856 condominiums for a total output of 4,012 dwellings. The firm also built 993 mobile homes.

Lyon projected sales for this year at $577 million, anticipating construction of more apartments (50% of its planned units), compared to 36% single-family homes and 14% condominiums. It expects to increase its mobile-home production slightly, to 1,000.

The runner-up, Watt Industries, posted $420 million in sales, from 1,874 housing units, of which 1,252 were single-family homes and 622 were condominiums. Its 1988 plans anticipate a sales increase to $495 million, with 68% of the units in single-family homes, 29% in condominiums and 3% in apartments.

Predict Sales Drop

CoastFed Properties, specializing in apartment construction, reporting $402,814,000 in sales, completed 3,692 units, 3,394 in apartments and 298 in single-family houses. This year, it looks for a drop in sales to $375 million, with 67% of its output in apartments and 33% in single-family homes.

This survey drew the largest participation ever, both in the number of respondents and number of builders ranked, with 186 survey forms returned, up from 173 in 1987.

A breakdown of the totals shows 177 firms reported sales and were ranked, 6 reported no sales volume for 1987, 1 reported sales volume for land only, 1 reported too late for inclusion in the survey, and another asked to have its questionnaire returned, apparently not wanting to be ranked.

Construction data for the survey includes only those units built in Los Angeles, Orange, Riverside, San Bernardino, Kern, Ventura and San Diego counties, although firms may be located in other counties.

Sales totaled $9,364,400,000 by the 177 reporting firms. This total was 26.1% higher than the previous survey figure of $7,424,500,000 for 164 participating companies.

Of the 177 building companies, 171 included projections for 1988 sales. These 171 firms reported total sales of $9,005,200,000 last year and expect a 19.9% increase to $10,794,200,000 this year. In the 16th annual survey, 158 companies had projected a much larger--29%--increase over their 1986 sales volume.

Of the 171 companies reporting 1987 sales and projections for 1988, 79.5%--136 firms--forecast an increase, but it was down from last year’s 85.3%, which accounted for 138 out of the 158 companies making projections for 1987.

Last-place (177th) Upton Development Corp. of Irvine anticipates the largest percentage gain in sales for this year, 900%, expecting to increase its coffers from $815,000 from the construction of four homes to $8,048,000 and 100 single-family dwellings this year.

Second-ranked Watt Industries is anticipating the largest dollar increase among survey participants, $75 million, from the 1987 total of $420 million to $495 million this year, representing a 17.9% jump.

Five firms with no sales in 1987 are looking ahead to 1988 sales, ranging from $1.3 million for Dena Development Inc. of Santa Monica to Diversified Income Property Services Inc. of Los Angeles to $52.8 million.

The others and their expected revenues are Western Pacific Development of Corona, $2.5 million; 1st Construction & Development of Calabasas, $6.9 million; Robinhood Homes, Chula Vista, $30 million.

A total of 73,652 housing units were built by the participating firms. That represented an increase of 35.4% from last year, but with 13 more firms reporting building activity this year.

Single-family homes built totaled 35,398 last year, or 48.1% of total construction. That was higher than than the 46.7% figure reported in 1986.

In this survey, as it did in 1986, 64th-ranking Fleetwood Enterprises of Riverside reported the largest number of single-family units--2,247--all of which were manufactured housing units.

Single-Family Homes

Kaufman & Broad Home Corp. of Los Angeles, ranked fifth, built 2,189 single-family homes, 95% of its total production. A total of 129 firms (72.9%) built single-family housing. That was up slightly from the previous survey’s 125 firms.

Apartment units built totaled 27,951, or 38%, of all construction reported, just below the previous survey’s 40%.

CoastFed Properties built the most units, 3,394, representing 91.9% of its total effort. Seventy-three builders, or 41.2%, reported building apartment units last year, compared to 62 firms, (37.8%, in 1986. Twenty-seven, or 37%, built apartments exclusively.

Of all housing units built, condominiums represented 14%, or 10,303 units. The top-ranked Lyon firm constructed 856 units, or 23.3%, of the total. Among survey respondents, 73 firms, 41.2%, built condominiums. That was a drop from the previous survey’s 44.5%.

Among 173 firms looking ahead to 1988 construction, 140, or 80.0%, plan some activity in single-family housing. Twenty-seven firms, or 15.6%, of the survey participants expecting to build housing units in all three major categories this year.

The largest segment, 57, or 40.7%, plan single-family home construction exclusively; 77, or 44.5%, plan to build apartments and of that number, 17 or 22.1%, expect to build apartments only; condominium building is anticipated by 74, or 42.5%. Only 7 builders among 74 or 9.5% will build condominiums exclusively.

Decrease in Inventory

Inventory left at the end of the respective firms accounting periods totaled 3,407 units, a decrease of 1,722 units from last year’s survey total of 5,129. Just over half, 50.3%, or 89 of the 177 firms, reported no inventory. In 1986, 60 firms or 36.6% ended the year without inventory.

Century West Development of Santa Monica, ranked 46th, had the largest total of unsold units--700. JL Construction Co. of Cardiff by the Sea, ranked 79th, was second highest with 440 unsold units.

Of the 177 firms participating in this survey, 116, or 65.5%, took part in last year’s survey. The largest percentage increase among firms reporting sales in both years was for Raider Planning & Construction Inc., ranked 108th, up 542.2% from $2.8 million in 1986 to $18 million last year.

Young & Praisler Development Corp., of Santa Ana, ranked 174th, experienced the largest percentage drop in sales, 77.9%, from $7.7 million in 1986 to $1.7 million last year.

Largest Dollar Increase

The Lyon Co. had the largest dollar increase, $200,800,000, for a 65.7% increase over 1986. The largest dollar decrease was $104 million reported by Lincoln Property Co., of Huntington Beach, ranked 16th, representing a 40.3% decline in sales.

Among the repeat participants, 112 had made projections for 1987 sales; 51, or 45.5%, exceeded their predictions and 59, or 52.7%, did not and 2 firms, or 1.8%, exactly met their 1987 predictions.

The Dahl Co. of Balboa Island, ranked 172nd, showed the largest percentage gain (90%) over its projected figure with actual 1987 sales of $1.9 million compared to a projection of $1 million. Meanwhile, Young & Praisler Development Corp., ranked 174th, missed its projections by 79.5%, with actual sales in 1987 of $1.7 million versus its anticipated $8.3 million.

Again among the 116 repeat participants, Raider Planning & Construction Corp. had the largest percentage gain in number of units built, from 33 units in 1986, to 267 in 1987, a whopping increase of 709.1%. The Lusk Co., of Irvine, ranked 13th, had the largest numerical gain with 826 more units in 1987 than in 1986, an increase of 88.2%.

Solar-Equipped Units

Recording the largest percentage decrease in number of units built between 1986 and 1987 was Frontrunner Homes of Newport Beach, ranked 167th, with 88.1%. Lincoln Property Co. reported the largest numerical decrease, 43.3%, with 1,408 fewer units built in 1987 than in 1986.

There appeared to be little gain in the number of solar-equipped units being built. Only 18 builders, or 10.2%, of all participating firms in the survey expect to be involved in this category. In the previous survey, 12.8% of 164 participating firms reported plans to use solar systems.

The number of units planned for this year is only half of the 4,789 that were projected for 1987. Fifteen firms said they planned to include a total of 2,438 solar-energy units in the homes they build. Of that sum, 37.7% would be in single-family dwellings, 57.1% in apartments and 5.2% in condominiums.

Weinstock Construction Corp. of Studio City, ranked 59th, plans the largest total, in 514 apartments. A close second is the Pennhill Co. of Tustin, ranked 38th, with a projection of 508 units in single-family homes.

Manufactured Housing

Four companies, representing 2.3% of all survey participants, built manufactured housing units last year for a combined total of 2,338 units. In 1986, nine firms or 5.5% reported building 3,227 of these units.

The difference amounts to a decrease of 27.5% over 1986. Fleetwood Enterprises, which builds most manufactured housing units, showed a 2.1% drop in units built, 2,295 in 1986 and 2,247 last year.

However, because Fleetwood Enterprises does not make projections, production figures become guesswork.

Again this year, the only mobile home builder was the No. 1 firm, Lyon, which built 993 units last year. It plans to build 1,000 units this year. In 1986, 1,317 units were built.

One survey questionnaire was not returned in time for inclusion in the survey. The tardy firm was Master One Homes of Palmdale with sales of $1.6 million. It would have ranked in a tie 175th place.

Taylor Development Co. of Simi Valley, ranked 157th, was the only firm headed by a woman, Ellen Taylor. Her firm recorded $4.5 million in sales and anticipates a sales volume this year of $6.7 million. The production record shows 39 apartment units built last year, no inventory left and 68 apartment units planned for this year.