Southern California builders grow share of home sales

By JONATHAN LANSNER | [email protected] | Orange County Register
PUBLISHED: April 3, 2023 at 11:25 a.m. | UPDATED: April 3, 2023 at 11:52 a.m.

In an iced winter for house hunting, builders may have been Southern California’s bright spot.

Now it’s hard to get giddy when the number of closed purchases for new homes in the six-county region was just 4,944 in the three months ending in February, down 24% in a year, according to CoreLogic. But existing home sales fell 45% in the same period.

That translated to builders accounting for 11.2% of all wintertime local sales vs. 8.4% a year earlier – a gain of 2.8 percentage points. And note that in pre-pandemic 2015-19, builders were just 8.5% of the local sales market.

Homebuilders are having better luck because of two key factors.

First, they have noteworthy inventory of unsold homes to sell. Existing homeowners have been reluctant to sell in a market dominated by high prices and interest rates.

Plus, builders have been willing to offer steep discounts – often in the form of free upgrades, help with closing costs or buying down the buyer’s mortgage rate.

Locally speaking

Look at builder sales in the three months ending in February, by county ...
Riverside: 1,743 sales, down 17% in a year. Share of sales 20.7% vs. 14.1% a year
ago – a gain of 6.6 points.
San Bernardino: 1,089 sales, down 35% in a year. Share of sales 14.9% vs. 12.4%
a year ago – a gain of 2.4 points.
Los Angeles: 878 sales, down 42% in a year. Share of sales 4.8% vs. 4.7% a year
ago – a gain of 0.1 points.
Orange: 551 sales, down 3% in a year. Share of sales 11.7% vs. 7.5% a year ago – a
gain of 4.2 points.

Spring ahead

Local builders say the spring selling season started relatively briskly, with house hunters willing to sign sales contracts as mortgage rates dipped and the economic outlook seemed less muddy.

In Los Angeles and Orange counties, pending sales were up 11% in February vs. January, according to Zonda. Sales were still 30% below February 2022. In Riverside and San Bernardino counties, pending sales were up 3.4% in February vs. January but down 35% in a year.

What they’re saying ...

Richard Douglass, Trumark Homes’ Southern California president: “February was a tremendous month, with 52 homes sold — marking our largest sales volume for the month in the history of our division. We have 11 new home communities actively selling all over Southern California from Irvine and Saddleback to Oceanside and Covina. We are seeing continued increases in traffic and reservations.”

Stephanie Walker, Rancho Mission Viejo’s vice president of marketing: “Sales for our new Village of Rienda have been strong since opening last year, but February 2023 was a particularly strong month with 43 sales across all of our neighborhoods. We continue to see great demand for our homes with more than 50% of homes in the first phase sold or reserved.”

Patrick Higgins, Landsea Homes’ vice president of sales for Southern California: “Sales were incredibly strong in February, especially with the grand opening of Avelina in San Juan Capistrano earlier in the year. This sales pace has
continued into March and we are confident it will remain in the coming months given the high demand.”

And new options are hitting the market.

In South Corona, New Home Co. opened the Ellis and Monroe neighborhoods in the Bedford master-planned community.

Ellis has 78 two-story, detached residences, ranging from 1,730 to 2,013 square
feet with up to three bedrooms and three bathrooms. Prices begin in the mid
$600,000s. Monroe has 66 two-story detached homes, ranging from 1,826 to
2,175 square feet with up to four bedrooms and three bathrooms. Prices begin in
the high $600,000s.

New Home Co. said that 11 homes sold before the projects formally launched.

“Ideal options for buyers looking for attainably priced homes with more space and access to a wealth of lifestyle amenities,” said Michael Battaglia, New Home’s Southern California president.

Read the full article by the Orange County Register here