Don’t expect to see an abundance of new housing projects break ground in the remainder of 2008. Orange County’s builders have their hands full just getting their existing developments completed and sold.
“You’re not going to see too many new developments moving forward,” said Jeffrey Meyers, founder of Corona del Mar-based consulting firm Meyers Builder Advisors. “It’s a tough market,big projects in Anaheim and Irvine have stalled.”
As of this month, there were nearly 7,000 unsold new houses,either planned or already built,at projects under way in OC, according to data from the Costa Mesa office of Hanley Wood LLC. Those projects, when complete, will total about 16,300 homes.
It will take a few years, at a minimum, to get those 7,000 homes sold. Meyers is forecasting sales of about 3,000 new homes in the county this year, including 1,700 attached condominiums and 1,300 detached single family homes.
That’s on par with 2007’s level of sales volume, but off 20% from two years ago.
About 1,900 of those 7,000 unsold homes reported by Hanley Wood are in Irvine, primarily at The Irvine Company’s Portola Springs and Woodbury developments, as well as Lennar Corp.’s Central Park West development near John Wayne Airport.
Another 560 homes are planned but unsold just across the city line in Columbus Square, part of the first phase of housing development under way at the former Tustin Marine base.
These types of projects in Irvine and Tustin sell at prices starting around $400,000 and can go in excess of $1 million.
Most of the houses sell for $750,000 to $850,000 and are feeling the pinch of turmoil in the credit markets, as buyers are having trouble securing jumbo loans for more than $417,000.
New Jumbo Amount
The economic stimulus package signed by President Bush last week increases the maximum conforming home loan available through federally insured lenders such as Fannie Mae and Freddie Mac to nearly $730,000.
This should help buyers in pricey markets such as Southern California. It could have an impact on sales in the county, Meyers said.
The “Irvine Co. (projects) and Ladera Ranch would see some off the biggest benefits” of the government’s stimulus package, he said.
Newport Beach-based John Laing Homes, No. 3 on this week’s list of the largest OC homebuilders, said last week it started accepting sales reservations in accordance to the new jumbo loan ceiling.
Since “the new limits will only exist through 2008, we anticipate a market more in-line with regular, responsible consumers, rather than one driven by overzealous investors or borrowers,” said John Laing Vice President Linda Mamet, in a statement.
Combined with “the tremendous prices that new home builders are offering in comparison to resale homes that have not adjusted in price, consumers with steady incomes who can qualify for a fixed-rate loan would be foolish to wait,” said John Burns, president of Irvine-based John Burns Real Estate Consulting.
The 7,000 unsold homes under development in OC listed by Hanley Wood don’t include the majority of the nearly 9,000 homes planned around Anaheim’s Platinum Triangle, where only a few condo projects have moved ahead.
The largest project under way at the Platinum Triangle, La Jolla-based Windstar Communities LLC’s Stadium Lofts, has sold about 60% of its 390 homes.
Also not included in Hanley Wood’s tally are the majority of the 11,000 homes and apartments proposed for the Irvine Business Complex, most of which are in the early stages of planning and entitlements. The same goes for the thousands of homes expected to be built by Lennar at Irvine’s Heritage Fields at the former El Toro Marine base and at Rancho Mission Viejo.
Entitlements for projects in the Irvine Business Complex are good for 20 years. As a result, developers there aren’t required to start building immediately once their projects are approved by the city.
The Construction Industry Research Board expects to see permits for about 5,300 homes and condos granted this year, which is on par with 2007’s levels but down 34% from 2006.
About 62% of this year’s permits will be for attached condos, with the rest being deetached homes.
New developments expected to move forward this year include Makar Properties LLC’s Pacific City project, running along Pacific Coast Highway in Huntington Beach.
The project is expected to include 424 luxury condos and close to 200,000 square feet of shops and offices. In addition, a 250-room W hotel being built by Starwood Hotels & Resorts Worldwide Inc. will include 92 high-end homes.
Pacific City’s expected to be complete in 2010.
Other big projects expected to move forward in 2008 include Marblehead Coastal in San Clemente. Officials for Irvine-based SunCal Cos., the project’s master developer, say it has been adjusting its schedule to account for changing market conditions
The company’s still making progress on the project, which runs a couple blocks from the ocean next to the San Diego (I-5) Freeway. Model homes are planned to start construction at Marblehead late this year, and open in the first quarter of 2009, SunCal
officials said.
