It’s nice to come out ahead of the Wall Street Journal, however rarely that happens.
A story in the Dec. 7 Journal reported that homebuilders are offering free extras, such as flat-screen TVs and even bonus rooms, to entice buyers. I wrote a similar story for this paper, which came out a day earlier.
Since the housing market cooled in summer, I’ve been wondering if builders would offer concessions. Then a couple weeks ago I received marketing releases from Irvine’s Standard Pacific Corp. and Red Bank, N.J.-based Hovnanian Enterprises Inc. announcing freye options at some projects in Orange County.
The Wall Street Journal article was about homebuilding nationwide, though it specifically mentions OC. The article was based on a recent survey by the National Association of Home Builders. The survey found that 72% of homebuilders said they’re encountering “some” or “significant” buyer resistance to price increases.
In response, 28% of the builders surveyed said they’re offering optional items at no charge, up from 12% a year earlier.
The survey covered more than just free extras. It also noted 17% of the builders surveyed are working with brokers, up from 7% last year. Some builders are going as far as paying closing costs and points on mortgage loans.
The Journal noted OC and Las Vegas as once-very-hot markets that have recently cooled.
Journal reporter Ruth Simon wrote: “In Orange County, builders such as Taylor Woodrow Homes Inc. and Standard Pacific Corp. have begun paying commissions to outside brokers instead of relying solely on their own agents. Some builders in the Riverside-San Bernardino, Calif., area have begun cutting prices, according to Carl Reichardt, an analyst with Wachovia Securities, a unit of Wachovia Corp.”
Lending in Spanish
Horsham, Pa.-based GMAC Mortgage Corp. earlier this month announced the opening of a new office in Santa Ana at 3646 Bristol St.
Loan officers at the Santa Ana location are fluent in Spanish, according to GMAC, which is owned by General Motors Corp. The office is set to make home loans.
GMAC, in a statement, said the company “continues to build upon its commitment to serve communities that have traditionally been underserved by the mortgage industry.”
Studies show the dearth of Spanish-speaking loan officers is a major obstacle to Latinos hoping to buy a home, according to GMAC.
The new office also offers the GM Family program, which assists employees, retirees, dealers and suppliers of General Motors in buying homes.
GMAC is probably best known in OC for regular TV ads on behalf of its Costa Mesa-based unit Ditech.com.
Brian Childs, who heads NAI Capital Commercial in Newport Beach, has expanded his reach to the Temecula Valley.
The Encino-based brokerage in summer opened an office in Temecula. Childs said the area’s growth is surprising.
“A lot of players in Orange County are becoming players in that area, as far as developers and everything else,” Childs said.
Capital Commercial is the local affiliate of the NAI network.
Childs hired broker Dan Walsh who lives in the Temecula area. Other brokers who work full- or part-time in the new office: Dave Stolte, John Odegaard, Chris Hay and Brian Pearsall. NAI already has $100 million worth of listings in the area, including land, shops, and industrial and office buildings.
Perhaps the best known NAI brokers here set to do deals inland: George Economos, his son Steve and Geoffrey DeWolf, the third member of their team.
One of the largest new listings: a 38-acre slice of Murrieta zoned for 500,000 square feet worth of shops, offices and a hotel. NAI is set to lease space at the project, dubbed Main Street Murrieta.
Temecula Valley’s population is 110,000, with 450,000 people expected there by 2010, according to the brokerage. The draw: reasonable housing costs, freeway access, and a fairly central location.
Childs said he plans to open his next office in Anaheim, either in 2005 or 2006.
On the Mark
Orange County’s industrial market hit a couple benchmarks in the third quarter, according to brokerage GVA Daum Commercial Real Estate.
Vacancy declined to 6.3%, the lowest level since 2001, from 7.2% in the second quarter. And net absorption hit a four-year high with 2.75 million square feet.
Absorption refers to how much space is occupied via leases and sales versus how much is vacated.
The average rental rate improved a modest 3.3% to 62 cents per square foot per month versus the second quarter.
