Orange County’s shrinking homebuilding industry saw its third consecutive year of declining sales in 2008, resulting in the slowest year the local industry’s seen in a while.
The county’s 30 largest homebuilders sold 1,900 new homes and condominiums in 2008, a 24% decline from a year earlier, according to this week’s Business Journal list.
It’s the first time in recent memory that annual sales of single-family and attached homes here have failed to break the 2,000 mark for a year.
Sales topped 10,000 homes in the late 1990s. In the 1980s, the county often saw sales exceed 15,000 homes a year.
Not all homebuilders saw sales drop. Twelve developers on the list saw sales improve from a year earlier, while 16 saw declines. Two didn’t sell in the county in 2007.
Five builders sold more than 100 homes here last year, compared to nine builders a year ago. The top five builders made up about 44% of the county’s sales in 2008.
Sales have been dropping for a few years. On last year’s list, 2007 sales saw a 13% decline from a year earlier. 2006 sales saw a 36% drop from 2005.
Data for this year’s list was provided by the Costa Mesa office of Washington, D.C.-based Hanley Wood LLC.
The list excludes builders that converted existing apartments into condos.
Sales declines were seen for all types of homes in 2008. Detached, single-family homes once again saw the biggest decline in volume.
There were 780 single-family home sales here by companies on this year’s list, a 34% drop from a year earlier. As recently as 2005, there were 2,700 sales of new detached homes here.
Condo and townhomes fell 14% for the year, to 1,120 sales. It’s the third year in a row that attached new home sales outpaced those of detached homes.
High-rise luxury condo sales were next to non-existent last year. The only project registering sales last year was Opus West Corp.’s 3000 The Plaza tower in Irvine. Sales there, at an average of $1.7 million per condo, put the Irvine office of the Phoenix-based developer at the No. 27 spot on this year’s list.
Home Prices
The increased sales percentage of smaller, more affordable condos across the county, along with a general decline in per-square-foot asking prices for new homes, is driving down prices.
The average price of a new home sold here in 2008 was $682,000, according to Hanley Wood.
In early 2006, the median price for a new home here peaked at close to $1.3 million.
Million-dollar new home sales in the area now are more few and far between, as homebuilders have opted to build smaller, more affordable homes and have dropped the asking price of larger houses.
Only six homebuilders on our list averaged more than $1 million per home sold last year.
No. 5 Irvine-based John Laing Homes was the only one of those six companies among the top 10 on this year’s list.
John Laing dropped to the No. 5 spot from No. 3 after its sales dropped 50% to 101. The company averaged $1.1 million for its homes, with luxury homes the company’s building in Crystal Cove making up for cheaper homes sold elsewhere in the county.
The Aliso Viejo office of Miami-based Lennar Corp. saw a similar drop in sales last year, but it wasn’t enough to bump the builder from the top of the list. With 243 sales last year,a 46% decline from 2007 sales,Lennar took the top spot on our list for the third consecutive year.
Despite a slowdown for big plans at Irvine’s Heritage Field and Anaheim’s Platinum Triangle, as well as the mothballing of completed homes in Irvine’s Central Park West development, Lennar remains the builder with the largest number of ongoing projects in OC.
Lennar’s sales last year came from almost an equal amount of single-family homes and townhouses; sales by the company averaged $620,000 per home.
Walnut-based J.F. Shea Co.’s Shea Homes took the No. 2 spot, with 235 sales, largely in Aliso Viejo. The company saw a 27% increase from 2007’s figures, pushing the company up two spots from last year.
Another company moving up in the list was the Costa Mesa office of Del Mar-based Brookfield Homes Corp., which took the No. 4 spot. The company reported 103 sales in 2008, a 200% increase from a year earlier, when it was No. 21 on the list.
The company’s jump in sales was largely due to the opening of developments, as well as discounts on existing homes.
The builder’s projects include homes in Anaheim’s Colony Park and in Portola Springs.
Its sales averaged $452,000 last year.
Brookfield has been advertising some Portola Springs homes at a discount of $100,000 or more off their original price, to less than $700,000.
Other builders have been using different methods to move homes.
No. 8 La Jolla-based Windstar Communities LLC advertised a one-day discount of up to $125,000 off at its Stadium Lofts in Anaheim during the summer.
No. 16 Santa Ana-based Bisno Development Co. put unsold condos at its City Place development up for auction last fall, driving its sales up 150% to 38.
The continued decline in business for homebuilders resulted in more downsizing in the industry during 2008.
The largest 30 builders here now are estimated to have a total of about 1,580 employees, a 42% decline from a year earlier, according to this year’s list.
Only 12 builders responded to the Business Journal’s survey of worker numbers. The rest are Business Journal estimates.
