Real Estate Experts Find Good News in Slump: Land Bargains

Now is the time to buy.

At least that is what many of the 400 real estate officials and 87 exhibitors had in mind when they participated Tuesday in Chicago Title Co.’s annual Southern California land sales exposition.

But even these eternal optimists were bargain hunting. With a real estate slump well under way in California and nationwide, everybody was thinking of that basic real estate rule: Buy low, sell high.

“It is a great time to go bargain hunting for land,” said Tim Salyer of WestAmerica Properties Group, who came shopping for his Irvine development and land investment company.

Most of the land on sale was in the far-flung regions of Southern California’s high desert country. That is where the real estate market still seems to have some life.

A year ago, vendors at Chicago Title’s land fair were offering choice blocks of residential property in high-priced areas such as San Clemente, said David Christian, vice president of W.W. Dean & Associates, a Riverside County builder and developer.

“But today it is land in Temecula,” he said. And Ontario, Adelanto, Palmdale and Victorville, the San Joaquin Valley, Las Vegas and Bullhead City, Ariz.

In all, about 70% of the 1,200 pieces of land offered in the exposition catalogue were in the Inland Empire. Only nine parcels--less than 1%--were in Orange County. Los Angeles County, including its high desert communities of Lancaster and Palmdale, accounted for just 148 parcels, or 12% of the total.

The mathematics make it easy to understand why.

“In Victorville, a builder can get a lot ready for construction for about $30,000,” said Byron R. Hoffman, president of the Hoffman Co., a Newport Beach land broker. “At that price, you can bring in the house at $100,000 to $150,000. In Orange County, you can’t get a lot ready for much less than $100,000.”

The land exposition, held in Orange County each year by Chicago Title, one of the nation’s largest title insurance companies, is considered a major “networking” opportunity by members of the development community.

“We were worried this year that no one would come,” said Gary Fallon, vice president of the title company’s Southern California developer services unit.

“But we decided we had to go ahead, and we ended up with 87 exhibitors and more than 400 people who registered. Last year, in a much better market, we had 70 exhibitors and 386 people who registered in advance.”

Despite ongoing reports of sales slumps, nose-diving building permits and a financing drought, Hoffman and others said canny builders and developers are still in the market for land.

“The ones with financing are buying to be ready for the end of the slump,” Hoffman said. “Some of us believe that we will be in an acute housing shortage all over Southern California in six months or so, and then the builders that have lots ready to go will be on top.”

Hoffman said brokers in his company have “handled more offers to purchase land in the last 30 days than in the previous six months.” But buyers, he said, are still “bottom fishing” and aren’t interested in the higher-priced parcels that are prevalent in Southern California’s coastal counties.

About half of Tuesday’s crowd spent the morning listening to a panel of financing specialists assure them that there is, indeed, financing available for builders and developers--as long as they know where to look, can prove that they are financially healthy and have a long and successful track record.

“Financing, that’s the pivotal point of this market,” sighed Chris Giannoulas, marketing director for the newly formed land development unit of A.G. Spanos Construction Inc.

The firm, which is developing master-planned communities in northern San Diego County and in its hometown of Stockton, wants to sell lots to builders but finds that many are stymied “because the rules about construction lending have changed all of a sudden.”

Tight new federal regulation has choked off most of the construction money that once poured freely from the nation’s thrifts and banks, and the remaining lenders prefer to stick with major builders, she said.