Scarcity of Developable Land Fuels Drop in New-Home Sales
By DANIEL D. WILLIAMS
Orange County’s top homebuilders saw new-home sales drop 21% to 6,203 in 2001, though it wasn’t from lack of demand, they say.
The 25 largest homebuilders here sold 1,687 fewer homes last year than they did in 2000, according to San Diego-based MarketPoint Realty Advisors. The reason: a lack of land for new homes, according to homebuilders and industry sources.
“Our sales are going great,” said Jeff Roos, regional president for Lennar Corp., OC’s largest homebuilder last year. “But land is pretty scarce in OC. There’s definitely an ongoing, diminishing supply, and I don’t see that changing in the foreseeable future.”
The Miami-based homebuilder’s Lennar Homes California Inc. sold 574 OC homes last year, about half as many as it did in 2000. Lennar’s share of the OC market slipped from 13.6% in 2000 to 9.3% last year.
Orange-based Toll Brothers Inc. was one of the few companies that saw a bump in sales last year, thanks to activity in Yorba Linda and Orange.
In 2000, the company ranked No. 20 among OC homebuilders with 102 sales and 1.3% of the market. Those numbers climbed in 2001, and Toll Brothers jumped to No. 13 with 164 sales and a 2.6% market share.
But Toll Brothers was the exception. The land crunch hit most builders hard last year.
“The issue of being able to supply homes to meet demands in Orange County is one of the biggest issues we face,” said Richard Gollis, principle of Newport Beach-based The Concord Group, a real estate advisory firm. “There’s a huge imbalance between job growth to housing permits issued and that forces overwhelming commutes from places like the Inland Empire.”
There was little fluctuation in the ranks of OC’s top builders. The top 25 builders captured 94.8% of the market, down from 2000’s 97.2%.
“The biggest movement has been with companies sliding up and down the list through consolidation,” said Jaime Ramey, a vice president at MarketPoint.
Examples of that include Lennar’s buy of Pacific Greystone Corp., and Arlington, Texas-based D.R. Horton Inc.’s acquisition of Continental Homes Holding Corp., Ramey said.
After Lennar, the top five OC homebuilders were Irvine-based Standard Pacific Corp., Dallas-based Centex Corp., Newport Beach-based William Lyon Homes Inc. and Brookfield Homes, part of Canada’s Brookfield Properties Corp.
The land scarcity translated into higher home prices last year, according to Ramey, with the average price for an entry-level OC home hitting the $300,000 mark last year.
Large communities are in the works at Rancho Mission Viejo LLC’s Ladera Ranch and Talega in San Clemente, while others have cleared the approval process in and around Irvine.
Beyond that, builders are scrambling for smaller subdivisions in North County,anywhere from 15 to several hundred units.
“Even if we had reached 2000’s numbers, there would still have been a serious undersupply,” said Byron Hoffman, president of The Hoffman Company, an Irvine-based land brokerage firm.
