RESIDENTIAL
Softness in the Southern California and Las Vegas housing markets means 600 homes set for completion this year by Lennar Corp. now likely will be done in the first quarter.
The Miami-based builder, which has its California base in Aliso Viejo, cited hurricanes in Florida and production delays in Las Vegas.
Locally, “Southern California has presented to us a little bit of a softer face more recently,” said Stuart Miller, Lennar’s chief executive.
“Whether that’s a trend, I’ve consistently said one month in a row does not define a trend yet,” he said. “We’ll have to see.” Lennar builds in Orange, Los Angeles, San Diego and inland counties.
Homebuilders Standard Pacific Corp. of Irvine and Newport Beach-based William Lyon Homes Inc. both saw a drop in home orders in California in the third quarter.
Company officials with both builders cited a slowdown in California.
Price appreciation in OC, where homes cost on average more than $500,000, is giving buyers pause, they said.
In the third quarter, Standard Pacific saw Southern California orders fall 12% to 386 from a year earlier.
William Lyon doesn’t break out Southern California in its quarterly reports. It did report a 50% drop in California orders to 318 homes.
Pulte Homes Inc., based in Bloomfield Hills, Mich., with an office in Irvine, sent shock waves through the industry last month when it said it would lower prices in Las Vegas as a result of slower sales.
The news came along with a lowering of the builder’s earnings guidance for the third quarter and the year.
“Pulte has already implemented actions to lower local market pricing to better align the company’s operations with current market conditions,” said Richard Dugas Jr., Pulte’s chief executive, in a release.
Hmm. I wonder if we will see the same from OC’s builders.
Their Day Will Come
The bleeding should stop soon.
Rising mortgage rates could stop the flow of luxury apartment renters to houses, according to the October apartment research report from Marcus & Millichap Real Estate Investment Brokerage Co.
The average vacancy rate for luxury units hit 6.1%,high for OC,earlier this year. But the rate has begun a downward trend, and should fall to 5.5% by the end of the year.
The county’s overall vacancy rate is looking even better,for landlords that is. It should fall by a third of a point by year’s end to 3.9%.
Other factors are pushing vacancy rates down, including job and population growth, and a dearth of new construction.
Professional and business services are set to add 20,000 jobs this year. Many of those will be well-paid positions, such as lawyers, accountants and loan officers, according to Marcus.
The relatively strong job market, coupled with nice beaches, continue to lure people here.
“Despite high housing costs, the population will expand by nearly 36,000 residents in 2004. Among the age groups growing are those aged 20 to 24, which will increase by 6,000 people this year,” the report states.
Marcus & Millichap forecasts 1,900 apartments will be constructed in OC this year, a nearly 10% drop from last year and the lowest figure so far this decade.
The reasons are simple: land is limited and condominiums have gained in popularity.
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Despite the exodus of renters into homeownership, rents still have been moving up. The county’s average asking rent should end the year up 4% at $1,296 a month.
But even though rents are on an upward trend the sales prices of apartments should stop rising at the robust pace of the last few years. The culprit: higher interest rates.
The General Services Administration recently signed a $37 million, 10-year lease for 78,840 square feet of office space at 1585 Manchester Ave. in Anaheim.
GSA is handling the El Toro land auction on behalf of the Navy. The lease isn’t directly related to that, though.
The government agency wanted to expand locally,it has one office in Laguna Niguel,according to Michael Hefner, senior vice president in Voit Commercial Brokerage LP’s Anaheim office. He represented the landlord, 1515 Manchester LLC.
Bruce Hoffman and Jake Bobek of Equis Financial Group represented GSA.
The building also is home to Iteris Inc., formerly Odetics.
GSA buys and sells on behalf of the federal government. It also provides other services.
As for El Toro, GSA is moving the sale along with a little help from Colliers Seeley International Inc.
Potential bidders now can get an invitation for bid, an application to qualify for the auction in January, at www.heritagefields.com.
The invitation for bid spells out clearly what land is for sale, what’s on it now, and what restrictions there could be in the future.
The largest parcel is 1,752-acre parcel two, which is bordered by Irvine Boulevard and Alton Parkway. n
