Locally and Nationally-New Home Construction Activity is Up

Last in a four-part series

Century 21 M&M offices in Central California

Have Central Valley new home construction and sales hit bottom?  Is an industry rebound imminent?

It all depends on whom you talk to and the city you’re talking about.

Talk to Andy Krotik, a Coldwell Banker Gonella Realty agent and self-proclaimed optimist, and the comeback starts today.  Krotik is representing Clairmont Reserve, a once closed Atwater subdivision, which recently restarted new home construction.

“The interest is there.  We have people interested and calling,” he said.  “It could be the beginning of a recovery.  All eyes are upon us.”

Krotik said Sterling Communities of Sacramento purchased 109 lots from the closed project at a bargain price.  That’s the key to giving Clairmont Reserve a chance to succeed.

“I’m an optimist by nature,” said Krotik.  “You can only come out if you bought the lots right.”

Buying right allows the three floor plans to start at $169,900 for a 1,693-square-foot model.  The top-line model is 2,186-square-feet and is priced at $199,900.

At the right price, Krotik said a new house makes a lot of sense for a homebuyer.  He said the less desirable alternatives include: short sale, which can take up to a year to negotiate and close; and a bank-owned sale, which can place you in a bidding war.

In addition, the $8,000 tax credit for first-time homebuyers should help to spur additional sales.  To qualify, the home purchase must be made before April 30, 2010 and must close by June 30, 2010.

Talk to Robert Martelli, vice president of JKB Homes Corp. in Turlock, and he is less than optimistic about a quick recovery.  He believes jobs are the key to a new housing rebound.  In the Turlock-Modesto area, unemployment is approximately 17 percent.

“If you don’t have a job, what does it matter,” said Martelli, who estimates a true recovery could be a couple years away.

Esther Riffel, Madera Office, call (559)675-5941, email - Eriffel@c21mm.com

Talk about Madera County and jobs, the lack of, again is the key to the housing recovery.  Esther Riffel, a Century 21 M&M and Associates and a director of the Madera Board of Realtors, said unemployment is up to 40 percent in some of the county’s cities.  With the jobless rate sky high, significant new housing construction could be up to six years away, she said.

Nationally, there are many positive indicators:

  • The Center for Strategic Economic Research reports new home construction and related activities will add $20.38 billion to the California economy this year, up from $14.34 billion record last year.
  • D.R. Horton, the nation’s second-largest homebuilder, said new housing orders surged 45 percent and completed sales jumped 36 percent in its latest fiscal quarter, compared to the same period last year.
  • The National Association of Home Builders recently reported its housing market index rose two points in February, a sign that low-interest rates and federal tax credits are boosting demand for new homes.

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New Homes are Still Selling in Madera, Despite High Unemployment

Third in a Four-Part Series

Madera County, which has seen the peak of the housing boom, now wallows in the valley of new home construction and sales.


Linda Lewis, Madera Office call (559) 675-5904, email - Llewis@c21mm.com

Linda Lewis, Century 21 M & M Real Estate Agent, a Madera native and 30-year realty veteran, several years ago witnessed the ups that attracted national builders such as K. Hovnanian Homes and Lennar Homes.

“Anybody that built a subdivision in California came to Madera County,” said Linda.

Lewis then witnessed the lows, when new home construction crashed and subdivisions were deserted and abused.  “It’s a mess,” said the Century 21 M&M Realtor.  “As far as subdivision sales, it’s come to a screeching halt. Many were abandoned, have graffiti and are fenced off.  I wouldn’t touch one with a 10-foot pole.”

New home construction at Villa Granada, an 82-lot development by Capistrano Homes in west Madera, continues at a slow pace.  The subdivision originally broke ground in 2006.

According to Mark Finbrez of Madera Realty, the project has four homes under construction, with two sold.  He said 51 lots are still available.  The homes range from 1,322-square feet to 1,600-square feet and are priced from $159,000 to $179,000.

“We plan to build three or four every few months,” said Finbrez. “Unless things really start to pickup.  Things could pickup this summer.”

Linda Lewis said she closed 60 resale residential homes in 2009 and is hoping to match that total this year.  She said in 97 percent of her sales last year, a bank was the seller.

“They’re buying entry-level homes and they’re buying them from the bank,” said Linda.  “They’re not buying them from the sellers.”

The trend toward entry-level homes resulted in a drop in the median price — half sold for more and half sold for less — of Madera County homes.  According to the Multiple Listings Service, the median price home in November 2009 was $143,500, compared to $165,500 for November 2008.

Esther Riffel, Madera Office, call (559)675-5941, email - Eriffel@c21mm.com

Esther Riffel, a director of the Madera Board of Realtors and fellow Century 21 M&M Madera office agent with Lewis, has slowly been selling off the remaining homes of the foreclosed Rose Hollow subdivision in northwest Madera.

Map to Rose Hollow Madera, CA

“It’s been 1-1/2 years, a long process,” said Esther about sales at Rose Hollow.  “We started out with 13 and I have one in escrow and three remaining houses.”

Riffel said the homes are all over 2,000-square feet with four and five bedrooms.  The prices range from $235,000 to $265,000.  Some of the original prices approached $450,000.

The new Rose Hollow homes appeal to buyers that value a 10-year warranty on the structure, a brand new and never lived in house, and the desirable northwest Madera location.

“There’s a good quality of life,” said Esther.  “It’s a good place for raising a family.”

Rose Hollow, said Riffel, had built out approximately 150 homes and still has about 50 empty lots available.  She’s not too optimistic about construction starting anytime soon on the lots.

“I’m guessing five to six years,” she said about construction starting again at Rose Hollow.

Esther Riffel and Linda Lewis agree both resale and new home sales are hampered by Madera County’s high unemployment rate.   Lewis specifically noted the jobless rate in Firebaugh and Mendota.  “Their unemployment rate is as high as 40 percent,” she said.

NEXT FRIDAY: New housing forecast for 2010

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New Homes Sales Continue in Northern California

Second in a four-part series

It’s a chicken or egg paradox: What came first?  Strong new home sales or weak new home construction?

JKB Homes, Turlock, CA 209-668-5300

Robert Martelli, vice president of JKB Homes Inc., said the latest construction slump is the worst the Turlock-based builder has seen in more than 30 years in business.  He believes new home construction has hit bottom.

“The market is stabilizing.  We’ve seen the worst of it,” he said.  “I think we’ll see it return in a couple of years.”

Jobs, real jobs, said Martelli, are a key to re-starting new home construction.  Also hindering the industry is the flood of foreclosed homes on the market and high permit fees, typically $50,000 to $70,000, required to build a house.

“You can’t sell a house for how much it cost to build,” he said.

JKB has two finished homes available in Hughson Sterling Glen and a half-dozen that can be completed in 90 days.  The homes are priced from $215,000 to $270,000.

The slowdown in new home construction resulted in many developments closing, leaving behind a handful of completed, but unsold new houses.  Those houses, typically after bankruptcies and foreclosures, have now resurfaced as opportunities for REALTORS and homebuyers.

Century 21 M&M and Associates REALTORS Scott Abell, Chris Amaral and Nanci Wyatt have been selling new home sales at the Thomas Terrace subdivision of Pacific Pride Communites in east Modesto since October.

Scott Abell, Oakdale CA, call 800-644-0899 - email: sabell@c21mm.com

“We had 10 homes and we’re down to five,” said Scott “It’s real strong as far as the buyers’ side.  The demand has been very strong.”

Abell, a 20-year real estate veteran, said the homes range in price from $210,000 to $335,000.  He said the demand is partially from buyers wanting a new home, not a foreclosed or REO house in less than brand new condition.

Chris Amaral agrees new homes are in demand. “If I had a 100, I could sell a 100,” he said.  “Everybody wants to buy them. I’m running around with buyers everyday.”

Nancy Wyatt, Modesto, CA, call - 209-557-2630 - email: nwyatt@c21mm.com

Buying a new house over a resale house is a huge difference and the better condition is driving sales.

“It’s the difference between buying a new car and a used car,” said Nanci Wyatt.  “I hear that over and over again, ‘I just want a brand new house.'”

Chris Amaral, Oakdale Office, call - 209-844-1746 - email: camaral@c21mm.com

While a few scattered new homes are still being built, Nanci Wyatt and Chris Amaral believe large-scale projects are still 18 to 24 months away.  Scott Abell is more optimistic and said it could take off by the end of the year

“At some point there’s going to be an explosion,” he said.  “All of the sudden builders will see they can make money and then they’ll start building.”

NEXT FRIDAY: Madera County’s new home market

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How Foreclosures (REO’s) Affect New Homes Sales & Construction

First in a four-part series.

Brian Medeiros, Livingston & Oakwood Shores Manteca call at (209) 606-3507

While new home construction has slowed to a trickle, new home real estate sales have been flowing strong for Brian Medeiros.

Brian Medeiros, 37, realtor for 12 years with Century 21 M&M and Associates in Livingston, CA., specializes in selling new homes at orphaned subdivisions.

“I’ve done 11 of these,” Brian said about subdivisions he’s sold out.  “I’ve sold almost 300 new homes in the last 3-1/2 years.”

At the peak of the recession, he noticed once bustling subdivisions were stalled in selling their final finished homes.  Medeiros had a plan to move the unsold product.

Typically working with the developer and banks, Brian is able to remarket and offer the unsold homes for an attractive price.  Medeiros is selling against foreclosed, bank-owned and short-sale homes, all which can be in less than pristine condition and needing work.

“I’m selling the best stuff at the best price,” said Brian Medeiros. “You’re getting a turnkey home, ready to move in.”

Oakwood Lake

Brian’s latest project is Oakwood Shores, a 360-acre development in Manteca.  The gated community, on the former site of the Manteca Waterslides at Oakwood Lake, was foreclosed in summer 2008.

RL Communities reopened Oakwood Shores in late January with Medeiros handling sales.  The inventory includes 25 completed homes, 12 models and 427 lots.  Highlights include a 4,000-square-foot clubhouse, lakeside living, boat dock for water sports, two private lakes and 170-acres of water.

“It’s exciting,” said Medeiros.  “We’ve already sold three homes in two weekends.”

Oakwood Lake home

The finished homes, most displacing more than 3,000-square feet, range in price from $300,000 to $600,000.  The $600,000 furnished model originally was priced at $1.2 million.

“You’ll never see these homes at these prices again,” Brian said.  “You can’t build these homes for that price.”

Brian is hoping to sell all of the finished homes at Oakwood Shores within a year and then move to the next phase.

“We’re looking at building.  That’s our long-term goal,” Medeiros said.  “Our hope is to have hammer on nail in spring 2011, or it could be fall 2012.  Right now is our study period.  In about six months we’ll evaluate it.”

NEXT FRIDAY: Has new home construction hit bottom?

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