Local real estate developers and homebuilders remain bullish on the Southern California housing market, and OC in particular, following strong home price appreciation trends that are expected to carry over into next year.
FivePoint Holdings LLC (NYSE: FPH), OC’s only public residential master developer, is one such company pointing to strong market fundamentals in the third quarter, several months after the onset of the coronavirus pandemic.
“The housing market is doing very well, thanks to historically lower interest rates and higher demand for homes in all target communities,” Chief Executive Emile Haddad said during a conference call with analysts earlier this month.
He noted that Orange County has seen home price appreciation of 4.7% over the last 12 months and is projected to see an additional 7.4% increase over the next year, citing online home brokerage Zillow.
FivePoint saw about 10 sales per week at Irvine’s Great Park Neighborhoods during the first quarter, prior to the pandemic. During the third quarter, Haddad said the company is seeing closer to 12 sales per week.
“We hear that from our builders as well,” he said. “It’s across the board.”
FivePoint ranks No. 1 among OC’s fastest-growing public companies in this week’s special report, for companies with sales between $100 million and $500 million (see list, page 28).
TRI Pointe Gains
Irvine-based homebuilder TRI Pointe Homes Group Inc. (NYSE: TPH) reported a 50% jump in net orders during the third quarter and a 65% increase in its order pace to 4.8 homes per community per month, a new record absorption rate for the 11-year-old firm.
“While the historically low-interest-rate environment is clearly fueling a portion of the demand we are seeing, we believe there are demographic shifts and lifestyle changes that are occurring in this country that will have a positive long-term impact on our industry,” CEO Doug Bauer said during an October conference call.
An ongoing lack of supply coupled with increased demand has contributed to these industry gains, Haddad said, noting an increased homebuying push for “communities with open space, with trails, with lower density and with amenities” in the wake of COVID-19.
“People are appreciating that much more today than they were before COVID-19. So that obviously is a factor that has helped a lot at the Great Park,” Haddad said.