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Wednesday, May 25, 2022

New-Home Sales Surge to Levels Not Seen Since ‘03

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Close to $4 billion was spent on new homes in Orange County last year as builders here posted their best sales year since 2003, thanks to new projects going up at the area’s largest master-planned communities.

The county’s 30 largest homebuilders sold 4,829 new single-family homes, condominiums and townhomes here, a 31% increase from a year earlier, based on this week’s Business Journal list.

It’s the highest total reported on our annual list since 2003, when nearly 6,400 new homes were sold.

Single-family home sales, which totaled nearly 3,300, were up by 30% over 2015 levels. Condo and townhouse sales, meanwhile, posted a 32% increase to about 1,500.

Data for the list was provided by the Costa Mesa office of Washington, D.C.-based real estate research firm Hanley Wood LLC and augmented by information by individual builders and Business Journal research.

The increase in sales of attached condos and townhomes, which typically are smaller and more affordable than their single-family home counterparts, didn’t result in a drop-off in pricing.

The median price of a new home sold in Orange County was nearly $835,000 at the end of the year, one of its highest levels ever, according to data from Irvine-based CoreLogic Inc. New-home prices ran about 30% higher than the median price of an existing home sold in OC.

Last year’s sales jump reversed a one-year decline in local activity largely resulting from several of the area’s largest master-planned communities being between development phases.

That wasn’t the case last year, when the area’s four biggest sources of development—the Irvine Ranch, Great Park Neighborhoods in Irvine and Rancho Mission Viejo and Baker Ranch in Lake Forest—brought new offerings to market and had sales boom.

New-home sales at those developments jumped a cumulative 31% to 3,425, according to data from Irvine-based John Burns Real Estate Consulting. The projects had about 70% of all the home sales represented on this week’s list.

• The Irvine Ranch remained the area’s biggest source of new-home sales. Irvine Company-overseen projects had a cumulative 1,989 sales, up 19%, according to the John Burns Consulting report.

The area, which includes under-development communities such as Eastwood Village, Orchard Hills, Stonegate, Portola Springs and Hidden Canyon, is now the top-selling master-planned community in the U.S., according to the report.

About a third of the sales there were homes built by Irvine Pacific LP, the in-house building arm of Irvine Co. Irvine Pacific, with 626 home sales here last year—flat from a year earlier—retained the No. 1 spot on the list.

• Another builder that operates only on the Irvine Ranch, Irvine-based California Pacific Homes Inc., took the No. 4 spot with 298 sales here. That was up from 52 sales in 2015, making it the biggest mover on the list.

• Horsham, Pa.-based Toll Brothers and Walnut-based Shea Homes, the two builders heading up the Baker Ranch development in Lake Forest, swapped places on the list. Toll Brothers moved up to No. 2 with 485 sales, up 37%, and Shea dropped one spot to No. 3 with 409 sales, up 9%.

Each builder has projects under way at areas outside of Baker Ranch, which had 443 home sales last year, the 19th most of any master-planned community in the country and up 25% year-over-year.

The next set of home models at Baker Ranch is scheduled to open next month, one of several projects under way in Lake Forest (see story, page 26).

Other big OC developments show no sign of slowing down construction anytime soon.

Parasol Park, Great Park Neighborhood’s newest community at the former El Toro Marine base, opened for sales in phases beginning in December and will have nearly 750 new homes.

Some of the attached homes—which emphasize an urban feel designed to attract first-time buyers and empty-nesters—will come with prices on the low side for Irvine, starting at around $500,000.

The most recent portion of Rancho Mission Viejo LLC’s latest community, Esencia, opened in late 2015 and continues in full swing. About 450 sales were reported there last year, and it will have about 840 homes when built out.

• No. 9, Irvine-based CalAtlantic Group Inc., with an estimated 216 sales, is among the group of builders now selling at Rancho Mission Viejo, which will hold about 14,000 homes when its multiple communities are built out.

It’s also finishing the first phase of the Greenwood housing development in Tustin and is in talks with the city to buy more land at the Tustin Legacy development for an additional batch of homes.

CalAtlantic President and Chief Executive Larry Nicholson said this month that his company, the country’s fourth largest builder by sales following the 2015 merger of Irvine-based Standard Pacific Corp. and Westlake Village-based Ryland Homes, remains optimistic on potential for growth in the industry.

“We maintain our positive view on the housing recovery. The fundamentals for housing are good, despite the somewhat volatile political climate and the recent increase in interest rates,” he told analysts after the company’s latest earnings report this month.

Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.

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