South County Firm’s Weak Spot
William Lyon Co. officials, like many other builders, are seeing some signs of improved sales of new homes, but only at the low end of the price spectrum.
That leaves one major weak spot in their market--pricey South County.
“It’s the only exception to our overall gradual improvement,” said Dick J. Randall, Lyon Co. president.
Brian Norkaitis, a longtime Lyon executive who was promoted in January to the new position of president of the company’s combined Southern California operations, said land costs and the added price of building on hillsides are big and relatively inflexible parts of the cost of South County homes.
So the Lyon Co. has launched a new series, called American Classic Homes, attempting to bring prices down by reducing the size and complexity of the basic house.
Several of the company’s latest South County projects in Aliso Viejo and the Foothill Ranch planned community east of Lake Forest have been redesigned to be more affordable.
The result is that while the average single-family, detached residence in the area sells for about $330,000, Lyon is offering detached homes at $190,000 to $250,000.
“We are trying to get the average price for our single-family homes in Orange County below $200,000,” Norkaitis said.
“You can’t do it by building cheaper--people in this market are too sophisticated for that--so we work with our design people to reduce the square footage to the minimum comfortable level.”
By eliminating nooks and bays and a curve or two, Norkaitis said, an 1,800-square-foot house can be reduced to 1,500 square feet. And with efficient interior design, he said, “it will feel bigger than it really is, which is important because in the new-home market you are competing with all the other builders as well as with all the resales out there.”
Prices are lowered further, he said, “by offering fewer amenities. Maybe we’ll pull out the whirlpool tub and replace it with a standard one. Or we make air conditioning an option where it used to be standard.”
It is a delicate balancing act, he said, because Southern California buyers, especially those in Orange County, “seem to expect more than buyers in other areas.”
Norkaitis said he finds Orange County to be “a very specialized market” in which the homes “have to have more amenities and be more architecturally interesting” inside and out.
The William Lyon Co. built 1,968 homes and condominiums in Southern California in 1991, and Norkaitis said he expects to build almost the same number this year.
“We are going to focus on our existing projects, like Foothill Ranch, and by constantly refining the product and feeding new product into the market all year,” he said, “we will be well positioned with consumers when the market comes back.”
