Home Market on the Move
Builders are putting new home sales in Orange County into overdrive this weekend with at least 10 grand openings aimed primarily at the kind of buyers rarely seen in the 1990s--those looking to move up to bigger, pricier quarters.
The lemonade stands are being installed again in the gated Coto de Caza community. In Newport Beach, potential buyers are putting their names on lists and getting financing just to bid on new homes.
“I wouldn’t doubt that we’ll see a camp-out or a lottery at a couple of sites,” said real estate consultant Jeff Meyers of the Meyers Group in Irvine. “We haven’t seen that for some time.”
Indeed, in Fountain Valley, the Olson Co. will draw from a list of at least 60 names to pick buyers for 15 affordable homes in its Centre Park project. At Standard Pacific’s two upscale projects in Newport Beach’s Harbor Cove, a preview last weekend attracted 700 interested buyers for 149 sites to be sold this weekend.
“Somebody’s going to be disappointed,” said Scott Stowell, president of Standard Pacific’s Orange County division.
*
Builders are holding more grand openings of new projects this weekend than they have in some quarters of recent years, Meyers said. In last year’s final three months, only 11 new projects debuted.
“This is a big time signal,” said real estate consultant Kenneth Agid of the Marketing Department. “We’re on the cusp of a major transition in the building industry as it shifts from predominantly first-time buyers to a return of the move-up buyers.”
Shades of the 1980s selling binge? Not the way builders are talking now.
“We’ll never be that overconfident again,” said Larry Webb, president of John Laing Homes in Irvine. Stowell added: “That wasn’t good, in retrospect, for the buyers or for us.”
But builders and industry experts say that consumers are more confident about the security of their jobs and the recovering Southern California economy. The recent end to Orange County’s bankruptcy also bolsters that confidence, they said.
In addition, sales of new homes statewide have been rising this year, fueled in part by rising resales of existing homes. With interest rates stable, Agid said, prices also have been rising, helping homeowners “recapture some of equity meltdown of early 1990s.”
Builders believe buyers are sensing that the time is right to move.
“The last two weeks have been record sales for us,” said Denis Cullumber, president of Greystone Homes Inc.’s Orange County division.
“People are not buying over their heads as they did in 1980s,” he said. “We’re seeing people who could qualify for higher loans and could buy more but are taking a more conservative approach.”
Still, the sheer number of grand openings this weekend has builders excited.
“One of the nice things is that there is a big price variation in the housing,” Webb said. “It’s more complementary than competitive, and it’ll attract a wider range of buyers.”
*
But what is affordable in Orange County is still fairly steep. Olson’s Centre Park is a gated community of three- and four-bedroom homes that are selling for $249,900 to $259,900. The city of Fountain Valley will kick in loans of $30,000 each, with no interest or payment for the first 10 years.
The homes are limited to those with moderate household incomes, which, for Orange County, is $73,550 for a family of four, said Mark Buckland, Olson’s president.
Most of the housing available now is for the move-up market, and South County’s Coto de Caza community has four separate projects debuting to the general public this weekend.
Coto’s new developer, Lennar Corp., and four of the gated community’s builders are launching a coordinated grand opening with all the trappings of a 1980s housing rush.
Besides bringing out the lemonade stands, they will have barbecues, nature tours and special events, such as llama rides and face-painting, to keep the kids occupied while their parents go house-hunting.
Prices range from about $230,000 at Greystone’s Montecito project to about $480,000 for estate-size homes at Polygon Communities Inc.’s Gleneagles project.
“Everyone believes that the Orange County real estate market hit bottom late last year,” said Thomas Martin, a Lennar vice president who runs the Coto operation. “Real estate in general is on the upswing, both in resales and new home sales, and interest rates are still good at 8%.
“Last year, when people came looking for a home here,” he said, “they said they were looking for a home to buy in six months to a year. Now people are looking to buy now or within six months.”
Greystone also has a more expensive offering opening this weekend near Newport Beach, and Standard Pacific has two projects debuting in its Harbor Cove area of Newport Beach as well as its Pinehurst Estates in Fullerton.
At Greystone’s Civita project along Newport Coast south of Newport Beach, company sales agents won’t be encouraging a lottery this Sunday for 25 homes priced from $480,000 to $690,000.
Instead, Cullumber said, the company will open the gated community’s doors at 8 a.m. and take names of those who already are qualified for loans and who don’t need to sell their existing homes to buy. At 4 p.m., he said, agents will start writing sales contracts for the homes.
“One of the more dynamic things about these projects, especially for Newport Beach, is to see so many new products out there,” said consultant Meyers. “We just haven’t seen that much new product before.”
Though not part of this weekend’s sales effort, Taylor Woodrow Homes soon will add to the number of new units in Newport Beach with sales of its project, called Castaways, Meyers said.
Builders point out that land is getting harder to find in cities already built out like Newport Beach and Fullerton, so the new projects coming to market are all the more unique.
“These are not boom times,” said Laing’s Webb, “but I feel that the market is only going to get stronger. Now’s a good time to move forward.”
(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)
Housing Permits
In April, the number of permits issued for new home construction in Orange County was the highest in eight months, another indication that the real estate market is on the rebound. Permits issued monthly from April 1995 to April 1996:
1995
*--*
Month Single-family units Multifamily units* April 470 232 May 440 421 June 722 124 July 466 200 Aug. 660 272 Sept. 587 53 Oct. 315 170 Nov. 539 164 Dec. 479 97
*--*
1996
*--*
Month Single-family units Multifamily units* Jan. 511 424 Feb. 331 39 March 490 267 April 658 737
*--*
*Attached homes, condominiums and apartments
Period Comparison
From January to April of this year, there were 38% more permits issued for construction of new single-family homes than during the same period a year ago. Permits for construction of new multifamily homes are up 29%. Permits issued from January through April, 1995 and 1996:
*--*
Period Single-family units Multifamily units January-April 1995: 1,455 1,136 January-April 1996: 1,990 1,467
*--*
Source: Construction Industry Research Board; Researched by JANICE L. JONES / Los Angeles Times
