Speculation Builders Back on the Scene

Mission Viejo real estate agent Bob See, who specializes in custom home properties, says he’s seeing a jump in activity in that market, too.

Buyers seeking lots to build homes of their own still make most of the purchases. But a breed once thought to be extinct in Orange County--the speculation builder--is back, See says. “Spec” builders buy lots one and two at a time and build fairly ritzy houses on them without having a contract with a buyer. The homes they are building along the coast and in Coto de Caza these days, See says, are selling in the $600,000-$1.2 million range.

“Builders who left [Orange County] for stronger markets in Colorado, Nevada and Arizona are returning to ride the projected upswing in the local economy,” says See, who is with RE/MAX South County real estate.

They are picking up lots at prices that have started climbing but remain well below the budget-busting levels of the late 1980s. As a result, they can make decent profits without pushing the selling prices of the completed homes into the stratosphere, he says.

See’s database lists 250 custom lots for sale in Coto de Caza, Laguna Niguel, San Juan Capistrano and San Clemente--the communities he works in. Selling prices are all over the board, but the average is about $220,000.

Many of the lots, though, are owned by banks that got them through foreclosures and repossessions and would like to get rid of them, See said. “When you pick up a bank-owned custom lot at 50 cents on the dollar, you can see there’s a lot of profit potential.”