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Wednesday, May 29, 2024

OC Homebuilders Plot Recovery as Prices Stay High

New Home Sales Slip 7% to 2,991

Orange County’s largest homebuilders are feeling the side effects of last year’s interest rate hikes, with local home sales off nearly 7% last year, losing much of the gains made in 2021.

The top 14 builders in Orange County last year sold a cumulative 2,991 attached and detached homes in the area, according to this week’s Business Journal list.

Last year’s list featured 20 builders with more than 32 sales; they sold a cumulative 3,677 home sales. This year’s list includes builders with more than 28 local sales.

The market uncertainty that prompted buyers to rethink decisions last year isn’t likely to significantly impact home prices, residential executives tell the Business Journal, with demand continuing to outpace the region’s diminishing supply.

“As interest rates have settled down some, buyers still recognize the great need for housing,” Tom Baine, Southern California division president at Newport Beach-based Landsea Homes Corp. (NYSE: LSEA), told the Business Journal.


Landsea Moves

Landsea is one local builder with a growing focus on markets outside of California—the firm opened its 23rd community in Florida last year—and that focus is now an internal one, with the company announcing plans last week to move its headquarters to Texas.

The company is currently the most valuable publicly traded homebuilder with headquarters in Orange County; it counts a market value of $280 million.

It moved down one notch on this year’s list to No. 12 with 84 total home sales in OC last year, a 24% drop from the year prior.

Traffic and sales have picked up at “every one of our Orange County communities” in the first few months of the year, according to Baine.

“We recently opened Avelina in San Juan Capistrano and interest and sales have been strong since the beginning. We also recently sold out at ShadeTree in Ontario, our largest Southern California master-planned community to date,” Baine said.


The Landing

Brookfield Residential Southern California saw by far the largest sales jump in 2022, with 260 homes sold, compared with 21 the year prior.

The bulk of this activity took place at The Landing, a 400-home project in Tustin that broke ground in 2021 at the intersection of Barranca Parkway and Tustin Ranch Road, a short walk from the Flight office complex and The District shopping center.

Brookfield sold 229 homes at the project in its first year of sales, with more than 85 move-ins. All of the sales occurred without price reductions, the company said.

“Orange County continues to experience a shortage of housing at all levels, from first-time buyers to move-up families, and opportunities to build are limited,” Caitlyn Lai-Valenti, residential vice president of sales and marketing at Brookfield, said.

Prices range from $600,000 townhomes to single-family homes totaling north of $1.6 million.


Irvine Plans

Irvine Pacific, the in-house homebuilder for Newport Beach-based Irvine Co., also reported a sales increase, coming in at No. 2 with 468 homes sold last year, up 5.6% from the year prior.

Irvine Co. is working with the city of Irvine in a new plan, dubbed the Gateway Preserve, which will redevelop the All American Asphalt plant in North Irvine into homes and open space.

All American Asphalt Inc. has operated the site as an asphalt batch plant since the early 1990s, prior to the land being incorporated into the city of Irvine. Resident complaints about odors from the site have grown in recent years, prompting the city to “evaluate and implement programs to improve residents’ quality of life and public health,” according to Mayor Farrah Khan.

The city will fund the acquisition of the plant through a deal with Irvine Co., which has agreed to transfer 475 acres of land to the city, with an 80-acre parcel to be master-planned for residential development.

Irvine Co. is also moving ahead with its Orange Heights residential community, a 1,180-home development south of Irvine Regional Park off Santiago Canyon Road.

More homes are also in store for the Orchard Hills community in North Irvine.

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