Orange County’s largest homebuilders unsurprisingly posted another disappointing year of sales in 2007, with the least new home sales reported here in recent times.
The county’s top 30 homebuilders sold 2,570 houses and condominiums in 2007. That’s down 13% from a year earlier.
Last year’s poor sales followed a weak 2006 that saw an even steeper drop of 36% in new home sales,the biggest year-to-year percentage drop reported by the Business Journal to date.
For the second year running, sales of condos and townhomes here outpaced those of detached homes,a change from the trends seen though most of the past decade. There were 1,347 condos and townhomes sold in OC in 2007, down 18% from a year ago.
Sales of detached homes held up better, with 1,223 sales here last year, down 6% from 2006. As recently as 2005, there were nearly 2,700 sales of detached homes, which typically sell for more than condos.
Data for this year’s list of top builders was compiled by the Costa Mesa office of Washington, D.C.-based Hanley Wood LLC.
While the effects of the mortgage industry meltdown and slow sales of potential buyers’ existing homes are having an effect on sales, another reason behind the low figures is that the homebuilding market here only has a few large developments under way.
Sales figures have been as high as 10,000 homes and condos sold in 1997. In the 1980s, 15,000 homes selling per year was the norm.
South County projects such as San Clemente’s Talega and Ladera Ranch are nearing completion, and homebuilding at major developments such as Rancho Mission Viejo and Heritage Fields in Irvine are yet to kick off.
The yearly decline seen by builders here last year wasn’t nearly as steep as those seen for sales of existing homes, which were down more than 20% from a year earlier as homeowners have been less willing to lower their prices than developers.
The steep discounting seen at some new home developments,estimated to be 15% to 20% for some projects in Irvine and Tustin,hasn’t made its way to many homes on the resale market.
Lennar Corp. took the top spot in this year’s list for the second year running. The Miami-based builder sold 447 homes in 2007, nearly the same as in 2006. Sales of condos increased 27% for Lennar, while detached home sales fell 26%.
For the third year running, Newport Beach’s William Lyon Homes Inc. grabbed the No. 2 spot, with 294 sales. That’s up 11% from last year’s list. The company, which is now in its second year of being privately held, saw condo sales increase 11%, while detached sales fell 3% from a year ago.
The Villages of Columbus, a 2,000-home development being built along the Irvine-Tustin line at Tustin Legacy, helped both homebuilders retain their top spots on this year’s list.
Nearly half of Lennar’s sales came from homes it is building at Tustin’s Columbus Square. About a hundred sales came from three projects it has in Orange. Roughly another 40 sales came from its Santiago Street Lofts development in Santa Ana.
William Lyon, meanwhile, saw about 170 sales at Columbus Square in Tustin, and nearly 70 sales at nearby Columbus Grove in Irvine.
None of the Lennar’s biggest and highest-profile developments in OC provided much in the way of sales in 2007. Lennar halted sales of its low and mid-rise projects under construction at its Central Park West development in Irvine late last year, until market conditions improve. Nearly 1,400 homes and condos are planned and under construction there.
In Anaheim, city officials say the company is looking at selling some land at its A-Town project at the Platinum Triangle to a developer who would build apartments instead.
Big Gainer
Newport Beach-based John Laing Homes moved up eight spots to No. 3 in this year’s list, with 201 sales, a 90% rise from a year ago. The company has projects moving forward at The Irvine Company’s Portola Springs community, as well Talega in San Clemente and Pacifica San Juan in San Juan Capistrano.
John Laing also posted close to 25 sales along Newport Coast, where the county’s most expensive homes are going up. Homes there are selling for $3 million to $7.5 million, with some homes going for $1,000 per square foot and higher. Other Newport Coast builders making sales last year include No. 4 J.F. Shea Co. of Walnut and No. 5 Standard Pacific Corp. of Irvine.
Other big movers on this year’s list were No. 6 KB Home of Los Angeles which moved up 12 spots, and No. 7 Centex Corp. of Dallas, which moved up 13 spots this year.
About half of KB Home’s 127 sales were at two projects in Anaheim, where it was the biggest homebuilder in terms of sales last year. It was followed by No. 17 Windstar Communities LLC of La Jolla, which is behind the first big project to go up in the Platinum Triangle, the 390-unit Stadium Lofts.
A majority of Centex’s 114 sales were in two Orange projects, making it the biggest builder in the city, followed closely by Lennar. Even though it’s not building there, Centex made its biggest splash in 2007 in Tustin. It announced in April it was pulling out of the partnership that’s developing the largest part of Tustin’s former Marine base. Two units of J.F. Shea now are heading up Legacy Park, the roughly 820-acre masterplanned development, and the biggest project at the 1,500-acre former Marine base.
Along with OC, Lennar was also the leading homebuilder in all of Southern California last year, according to MarketPointe Realty Advisors.
The company, whose day-to-day operations are largely run out of its Aliso Viejo office, had 2,555 sales in all Southern California last year. KB Home came in second with 2,339 sales, followed by Centex and Standard Pacific.
