With demand building, mortgage rates still historically low and builders getting restless, OC METRO takes a look at an industry hard hit by the recession but showing signs of reawakening as 2011 arrives with potential and promise.
The cynics would snicker and question loudly: Why write a cover story about an industry that has been deader than a doorbell with rusted batteries? It is a fair question when you consider that new-home development had all but vanished in the past three years, as once high-flying builders retreated into obscurity during the worst buying market in more than half a century. The industry had crashed and burned, as unemployment soared and the “f” word – foreclosure – became a nightly sound bite on the 6 o’clock news.
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by four local executives.
But from those ashes the proverbial green shoots are sprouting, particularly here in the greater Orange County market. It may take several more years for the industry to return to something close to respectable construction and sales activity. But there are signs the worst is over, and serious planning is under way in many corner offices to capture pent-up demand in 2011 and, particularly, 2012.
The Irvine Co. – which holds a unique position as landowner and now homebuilder with the return of its construction arm, Irvine Pacific Homes – has been the big winner in the past 12 months. Its bold launch of at least nine new projects in the villages of Woodbury, Woodbury East and Stonegate East in Irvine landed the region’s largest builder of master planned communities more than 800 home sales, and interest among buyers remains strong. Moreover, merchant builders such as Tri Pointe Homes, Van Daele and Brookfield Homes all have reaped the benefit of the Irvine Co.’s correct reading of demand in the local market. But other longtime builders like Shea Homes, Lennar and Standard Pacific Homes are testing the sales waters and having success in other Orange County communities, and even the Inland Empire.
Where’s the demand coming from? A new study by the National Association of Realtors says record numbers of first-time buyers are gobbling up homes – new and resale – thanks in large part to the historic low mortgage rates and a growing consumer appetite to start spending again. Nationally, nearly one out of every two homes purchased were by first-time buyers. The study showed today’s entry-level buyer is typically younger and richer than in the past, and many are getting help from parents, relatives or friends for down payments because credit from traditional lenders is still tough to come by.
It is against this backdrop of incremental improvements in consumer confidence, bottled-up demand and more “affordably priced” homes in the greater Orange County market that prompted OC METRO to take a closer look at an industry that just 18 months ago was going nowhere – fast.
Four homebuilding executives (see below) shared their forecast for 2011 and beyond, and we provide seven important tips for buyers looking to jump into the market, along with a snapshot of some of the projects currently being sold or planned for construction in the next 12 months. It is a primer on homebuilding that sheds light on a key economic engine in the region.
Principal, Waterpointe Homes
Regional President, Southwest Region, Intracorp Companies
MICHAEL VAN DAELE
Executive Vice President, Van Daele Homes
Southern California Division President, Shea Homes
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