Sales at Orange County’s best-selling masterplanned residential developments showed no signs of slowing last year and are poised for more growth this year, despite a cooling trend across much of the country.
Sales increased in 2014 at Irvine Ranch, Rancho Mission Viejo, and Pavilion Park at Great Park Neighborhoods, with builders on the developments’ land posting a combined 2,307 sales, a 14% increase over 2013, according to a new report by John Burns Real Estate Consulting LLC.
Each of the projects placed among the top 20 best-selling masterplanned communities in the country, according to the Irvine-based consultancy’s data.
The brisk sales are the latest evidence that homebuilders see OC as one of the best locations to be in the country, particularly for projects that target move-up and higher-end homebuyers.
That trend likely won’t change anytime soon.
Each of the three communities has ambitious new phases of construction in the works, with nearly 7,000 homes planned over about the next three years that could keep their sales strong for the foreseeable future.
OC Up, Elsewhere Down
Only Houston, which has six projects listed in the top 20, had more entries than OC, but sales by that city’s crop of entries dropped 12% year-over-year in 2014.
The cumulative 14% year-over-year increase for the three largest OC projects contrasts with the 10% decline for the country’s 20 largest masterplanned communities on the whole, according to the report.
Sales for the other 17 best-selling communities in the country fell nearly 14% last year.
The only other masterplanned community in California to crack the top 20 on the list was Valencia in Los Angeles County, which ranked ninth.
That project, whose sales increased 33% last year, is overseen by FivePoint Communities Management Inc. in Aliso Viejo, the master developer of Great Park Neighborhoods.
The trend of sales declines at large projects outside California resulted from a slower sales market in some areas, higher prices in others, and delays in lot availabilities, the John Burns report said.
“Although numbers are down, most top-selling communities do not report a reduction in demand, but rather other constraints that are adversely affecting their ability to deliver new product,” noted a recent report by Bethesda, Md.-based-based RCLCO, which publishes its own data on masterplanned communities.
OC’s big three communities appear to have avoided any fallout from any such challenges in 2014. Irvine Ranch retained its No. 2 position among the country’s top 20, with 1,431 home sales in 2014, up about 1% over 2013 levels.
The Irvine Company-overseen development has been California’s best-selling masterplanned community for several years but likely lost some sales last year due to local competition from other projects under way, according to the John Burns report.
Rancho Mission Viejo placed No. 13 in the country, with 451 sales, up 25% over year-ago levels.
Pavilion Park in Irvine, which is nearing sellout, ranked No. 18 with 425 sales, a 73% increase—the second-biggest jump of any project among the top 20.
Another notable local project that kicked off last year, Baker Ranch in Lake Forest, reported 309 sales since it opened last February. That placed the venture between Shea Homes Inc. in Walnut and Horsham, Pa.-based Toll Brothers Inc. at No. 33 for sales among all masterplanned communities in the country.
The timing of the openings of Baker Ranch, Rancho Mission Viejo, and Great Park appear to have been well-measured, according to John Burns officials.
A key theme in the latest rankings is that “several communities with infrastructure started early in the recovery came out of the gate strongly in 2013 and experienced phenomenal sales in 2014,” according to the consultancy.
Baker Ranch, along with the three large OC masterplanned communities that ranked in the top 20, were responsible for 65% of the sales reported on this week’s Business Journal list of the top local homebuilders (see list, page 20).
Seventeen of the 30 builders on the list, including each of the top 10, had sales in at least one of the four large local communities.
Buyer Types
Asian buyers were a key source of sales for the Great Park and Irvine Ranch projects, while retirees bought a lot of the homes at Rancho Mission Viejo. About a third of sales at the latter were at Gavilan, a community geared for older residents.
The Villages in Florida, a community that, like Gavilan, gears sales to those 55 and older, retained the No. 1 spot in the country for sales last year, though its sales fell 24% to 2,601.
That project is believed to have about two years of land remaining if it continues to sell at its current pace, which would appear to give Irvine Co. in Newport Beach an opportunity to grab the top spot in the next few years if it keeps up its current pace of home development.
Next on Tap
Irvine Co., in addition to ongoing large projects including Orchard Hills, Cypress Village, and Portola Springs, has a 1,900-home project in the works on Jeffrey Road in North Irvine.
The as-of-yet unnamed project, described by the company as “Planning Area 5B,” was previously occupied by garden and plant company Hines Nurseries LLC.
Sales at Hidden Canyon, a smaller high-end project on Irvine Ranch that’s being led by Toll Bros., will also begin this year.
Also on tap in Irvine: Beacon Park, the second phase of development at Great Park Neighborhoods. Nine homebuilders were selected in January to build at the 960-home development next to Orange County Great Park.
The project, on land between Trabuco Road and Irvine Boulevard, is scheduled to open for sales this year as the second batch of home development at Great Park Neighborhoods.
Tony Moiso’s Rancho Mission Viejo LLC—OC’s second largest land owner after Irvine Co.—is preparing for the second phase of its development, which will ultimately include about 14,000 homes.
Grading work is under way at the 2,700-home project, called Esencia, which has a late 2015 opening date. The 860-acre project is about three times the size of the developer’s first phase of construction, Sendero, which includes the Gavilan community.
Baker Ranch’s developers are prepping for a second round of construction at their 372-acre Lake Forest community, which will ultimately hold close to 1,800 homes and more than 400 apartments.
