2 South County Projects Gain Financing : Housing: Developments by Pacific Gateway Homes target first-time buyers and feature prices under $200,000.
Private investors and a public pension fund that has pledged to help build lower-priced housing in California have agreed to pump almost $20 million into a pair of South County developments.
As a result, builder Pacific Gateway Homes will break ground this month on projects that ultimately will add nearly 300 houses priced between $150,000 and $210,000 to the county’s housing stock.
Included in the projects are 138 detached single-family homes priced from $175,000 to $205,000.
By comparison, only about 160 new detached homes sold for under $200,000 in Orange County last year, just 5.1% of all detached-home sales for the year.
Harvey Stern, the former Mission Viejo Co. president who started Irvine-based Pacific Gateway with two partners in 1989, said that $11 million in construction funding and equity capital for the detached-home development is being provided by CALPERS, the California state employees pension fund.
CALPERS last year vowed to invest almost $500 million in the construction of low-cost or affordable for-sale housing in the state.
Financing for a 155-unit townhome complex by Pacific Gateway will come from a $3-million equity investment by private investors and a $5-million construction loan from two community banks, Sunwest Bank of Tustin and Newport Beach-based National Bank of Southern California.
The townhomes, which will range in size from 1,000 square feet with two bedrooms to 1,900 square feet with four bedrooms, are tentatively priced at $150,000 to $209,000, Stern said, and will go on sale in June.
Sales of the single-family homes, however, will begin in early March--even before Pacific Gateway completes the models.
With prices for the 1,300- to 1,800-square-foot homes well below the 1992 detached-housing median price of $292,000, Stern said he is not worried about making sales without models.
Homes priced at or below $200,000 are targeted to first-time buyers in Orange County. It is the market segment that most builders agree will come back first and fastest when the local economy begins recovering from the recession, and it is the market that has been healthiest during the recession.
“Entry-level housing is where the demand is,” Stern said. “All the other price ranges are discretionary, because the people who would buy those houses (typically) already have a home. That’s why we decided early on to specialize in entry-level product.”
Stern is president of Pacific Gateway, in partnership with Horace Hogan, the company’s executive vice president and a fellow Mission Viejo Co. alumnus, and Toronto investor Ken Fields, former president of Bramalea of Canada, one of that country’s largest builders.
The company has an earlier residential development in Aliso Viejo, the Windsong townhome complex, where prices of $162,000 to $180,000 have helped make it one of the planned community’s best-selling projects.
Outside Orange County, Pacific Gateway is building homes in Chino Hills and is master developer of the 4,250-home Desert Highlands planned community in the Antelope Valley.
