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Some local homebuilder projects selling, others are caught in the slump

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Despite the inventory of offered and unsold new homes in San Diego County remaining above 5,000 units and the majority of developments averaging less than one sale per week, locally-based homebuilders continue to remain active in the market in terms of releasing new phases of current projects and planning for the construction of new homes.

One reason for this continued activity is the optimism of several local homebuilders, who think a significant amount of existing offered and unsold inventory will be absorbed in the coming six months.

Carlsbad homebuilder Barratt American says it is seeing quicker absorption of new units at its City Square development in downtown Escondido.

Recently the homebuilder announced that in the past month 18 town homes had been sold at City Square.

"In any market that's probably uncommon," said Larry Clemens, president of Barratt's Urban Division, adding this is welcomed news in the current one-sale-a-week market.

Clemens attributed the new products' success not only to the location and price of the homes, which range from $388,000 to $500,000, but the development's colors and architecture, which look much different than typical housing in Escondido.

Barratt has recently enjoyed product success with several of its other new developments, including Metrome in downtown San Diego and Seahaus in La Jolla, which are both sold out according to Clemens.

Aside from City Square, the homebuilder is currently offering three other for sale products including Aragon, a town home project in La Mesa; Magnolia Estates at Bressi Ranch, a luxury home product in Carlsbad; and Nantucket, a luxury home product in Leucadia.

While City Square has experienced surprising sales figures, this has not been the case for the other three developments.

From September 2005, when sales officially started, to the beginning of July this year, a total of 31 units had been sold at Aragon, with 10 units yet to be developed, according to development data provided by MarketPointe Realty Advisors.

Since the middle of August 2005 to July of this year, 17 luxury homes have been sold at Magnolia Estates with five sold during the second quarter of this year.

As of March 2006, 16 homes have been purchased at Nantucket with six sold during the second quarter 2007.

"You'd love to see two sales a week (moving forward)," Clemens said.

Focusing on the future, new products Barratt builds in the county will either cater to first time homebuyers or the luxury market, which is similar to the existing product the company currently has for sale.

"In our mind there are two markets (the luxury and first time homebuyer)," Clemens said, adding recently the market is being weighted more towards the luxury end, as the baby boomer generation is looking to move up.

Future developments by Barratt will include Moonstone, a three-story town home project in Carlsbad that will feature units ranging from 1,438 square feet to 1,529 square feet, and Fanita Ranch in Santee, one of the last master-planned communities in the County.

Fanita Ranch will feature 1,300 homes, 1,400 acres of nature and open space, and 200 acres of recreation.

Clemens is optimistic Fanita Ranch will sell well, as Barratt will offer a variety of product type in the community.

A local homebuilder typically not known for developing a variety of product type is Del Mar-based Davidson Communities, who despite limited land and slow sales is still planning new homes in North County.

According to Bill Davidson, president of Davidson, the company is doing on average two sales a month at its four actively selling projects.

"It's half of what we'd like to see," Davidson said, who attributed the decline in sales activity to the overbuilding that occurred the past several years.

The overbuilding resulted from builders developing beyond demand, as they underestimated the amount of speculative buyers that were attempting to flip homes.

Actively selling projects developed by Davidson include: Atrium at Eastlake Vistas, which has experienced 35 sales from late January 2006 until the beginning of July 2007; Clearstory at Rollings Hills Ranch, which has 28 sales since mid-October 2005; Kensington at Del Sur, 27 sales since mid-February 2006; and Scripps Preserve at the Estates, 21 sales since mid-November 2006, according to MarketPointe.

All four of the developments have phases that have yet to be constructed.

According to Davidson, the current sales market has definitely affected the amount of homes the company releases in a phase, as in prior years the homebuilder would develop 16 to 20 homes in a phase. Today the company includes six homes in a phase.

In terms of future developments, Davidson said the company is bidding on acreage across the county, however sellers of land aren't dropping their prices.

One project Davidson is preparing to build is Viridian at La Costa Greens, which would include one- and two-story homes from 2,823 square feet to 4,194 square feet.

he project will include 91 homes priced from the mid $900,000s.

The third locally based homebuilder, McMillin Homes, did not return a call by deadline, however it appears this division of the Corky McMillin Companies is experiencing similar sales activity as the other two local builders.

While the company has sold nearly 3,000 units at it's Lomas Verdes community, which they acquired the land for in 1997, it's three actively selling developments within the master planned community experienced overall slow sales figures for the second quarter of this year.

According to MarketPointe, Indigo experienced only one sale during the second quarter, while Jacaranda had five sales.

Terracotta, with 11 sales during the quarter, experienced nearly one sale a week on average. All three of the developments have future phases that have yet to be built.

The company's Quintessa at Rollings Hills Ranch in Chula Vista also experienced similar sales figures, with only four homes were sold during the second quarter.

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