Archive for October, 2009
Breeza in Downtown San Diego- Better Than Ever
October 24th, 2009 categories: Our Market
If you haven’t seen Breeza downtown, what are you waiting for? It just doesn’t get any better than this. Located on the waterfront of peerless San Diego California, Breeza has everything you could want in a new home or home away from home.
The location is one of a kind. Perched on the edge of San Diego bay, overlooking the iconic Star of India, Breeza not only has eye-dazzling views but also offers the undeniable lifestyle only found in San Diego California. Sure, it’s beautiful, sunny and warm but you also have world-class dining, shopping and that California Dreamin’ state of mind in which to relax and enjoy. No GIGANTIC BUGS AND STIFLING HUMIDITY HERE! (Sorry Florida).
State of the art amenities like gourmet kitchens boasting granite counter tops, cool-contemporary cabinets, stainless steel appliances and luxury interior appointments are a major selling point at Breeza.
Enhance your life with contemporary style and good taste while getting a once in a lifetime deal on a pristine piece of Real Estate. Our market has made these homes much more affordable than you would imagine- much more affordable than ever anticipated…
Entertain your friends and family at cocktail hour on the breath-taking roof top viewing deck. Relax in the comfortable surroundings and plush furniture enticing you to stay long after the incredible sunset.
Sun bathe on the pool deck and unwind in the therapeutic spa- letting all your cares just float away.
I’m not making this stuff up- it’s really this good. If you don’t believe me, just swing by the sales center and chat with Nikole, Kelly or Augustine and they will give you the grand tour. Homes are selling quickly so don’t wait until it’s too late for you to get your place in the sun- at Breeza.
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List/sale price gap diminishes
October 16th, 2009 categories: Our Market
Home buyers still are paying less than a home’s asking price, but had slightly less negotiating power in August than they did in July, according to the August Zillow Real Estate Market Reports. Buyers paid a median $6,525, or 3 percent, less than the last listing price on homes bought in August, down from $7,018, or 3.3 percent, less for homes bought in July, according to the report. Negotiating power peaked in January 2009, when buyers were paying 4.5 percent less than last listing price, a median of $10,096.
Sellers also continued to cut prices on unsold homes. One quarter (24.7 percent) of all homes listed for sale on Zillow had at least one listing price reduction as of Oct. 1, 2009. For the U.S. as a whole, the median U.S. price reduction was 6.6 percent off the original listing price.
Several Metropolitan Statistical Areas (MSAs) in Florida made the top 25 list of markets nationwide with the greatest gap in list price to sale price; no MSA in California made the list. In two California markets, buyers paid more than asking price during August, according to the report: In the El Centro MSA, buyers paid 2.2 percent, or a median $2,479, more than asking price; in the Stockton MSA, buyers paid 1.3 percent, or $2,515, more.
“Negotiating power is a clear reflection of inventory levels, which dropped nationally in August. Tighter supply in some markets is translating into less of a discount off listing price,” said Zillow Chief Economist Dr. Stan Humphries. “Unfortunately, the brisk spring and summer home shopping season is drawing to a close now, and with foreclosures on the rise again, inventory levels will likely head back up in the coming months, leading buyers’ negotiating power to regain the ground it lost in August.”
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New Developer Takes on Infill Projects
October 16th, 2009 categories: Our Market
In what will undoubtedly become a milestone of local developer chutzpa, a progeny of the venerable urban developer Olson has started a business to build homes.
Really. Despite the fact that virtually no one else is.
While the target of the newly formed City Ventures is remnants of unfinished subdivisions, the developer has targeted more urban projects. “Our business plan is to focus on infill developments in the coastal counties of California,” said San Diego point man Tony Pauker, who expressed a strong belief in the state’s prospects for economic growth and long-term potential.
To start up a building company right now, necessarily means to initially focus on projects like the two City Ventures is starting at Scripps Ranch: 19 lots that was the last half of Viscaya, formerly a Warmington Homes project. The other project is in Stonebridge Estates.
The business model for these projects is simple. The developer intends to complete unfinished projects, but at a lower price. “We see a near-term opportunity to acquire well located finished lots at appealing pricing and be able to offer homes at very attractive pricing that will allow us to deliver 50 homes next year,” said Pauker, who expects to offer finished homes in the $700,000 to $800,000 range on sites that would have sold in the low millions four years ago.
City Ventures is planning the same strategy on a 34-lot deal in North County. That land purchase will close this month, and it will immediately start construction of homes to be offered in the $600,000 price range.
But this seems like just a warm-up act for this opportunistic company, which was co-founded by Mark Buckland of Olson and Craig Adkins, a well respected Orange County land broker. The initial capitalization comes from Imperial Capital in Los Angeles.
Business Plan
While Buckland and Adkins are the firm’s principals, they have hired five former Olson executives. Their business plan is to focus on infill developments up and down the California coast, including San Diego, Orange, Los Angeles, Ventura and Santa Barbara. City Ventures already has sites tied up in each locale, even though it has only been in business since June. It’s also searching along the Northern California Peninsula, including San Francisco’s East Bay.
It has committed to a 12-lot entitlement deal in Encinitas, a 6-acre site in Yorba Linda, a 48-unit site in Santa Barbara and a site in Santa Ana that is designated for “affordable housing” as part of a larger mixed-use project.
That is important, because in short order, City Ventures has placed itself at the cutting edge of what is undoubtedly a new wave of small-business real estate developers that will be focused on coastal California’s many “infill” opportunities. These will mostly concentrate on sites in existing communities that will require a new set of development skills oriented to high barrier-to-entry locations. These sites usually have issues of assembly, and will be subject to the complexities of entitlement, environment, redevelopment, adaptive reuse, mixed use and entrenched neighborhood resistance.
But like their former employer, Olson, which made its mark in Southern California by constructing two- to four-story residential condominium projects in infill and redevelopment districts, the principals have a long-term plan for City Ventures to build to this “sweet spot in the market,” as Pauker describes it.
Washed Up Car Dealership
What are they seeing and watching? One hint, says Pauker, is to look at the commercial downturn. He observes that the recent Roger Penske walk-away from purchasing Saturn from General Motors is a precursor. Apparently, Saturn will shut down, the latest of a compression of scale in the auto business. “What do you do with a vacant car dealership? Nobody in the commercial area is going to come in and back-fill these sites.”
In other words, they view a washed-up car dealership as a mixed-use development waiting to happen. City Ventures intends to work with cities and property owners on similar “gray field” opportunities.
It’s positioning itself early in the cycle. It is way too premature for most new residential construction to start. But in a way, this is exactly the right strategy. Each of the targeted coastal California markets has been virtually dormant of housing starts during the past four years. New and resale inventory has to be absorbed. Demand has to outstrip supply. Prices have to rise. Only then can new housing development take hold.
But it is also an anticipatory process. To get to the “sticks and bricks” stage, you have to start early. The best case scenario is to find properties with some sort of preliminary entitlement, or the potential for approval. The ideal is a property with a tentative map. “You pull the trigger (on a purchase of land) today and it will not produce a home until Thanksgiving of next year, or more realistically not until the end of 2010 or 2011,” cautioned Pauker.
The successful players will be working with cities, in effect forming public-private partnerships to accomplish such things as rezoning, better use of city-owned property to raise capital, or just to help these projects reform a tax base decimated with the closure of car dealerships and big box malls.
Many in the housing industry see an impending turnaround in the housing market, now having witnessed several months of price increases.
If developers do not start today, with an up to 24-month lead time, there will inevitably be competitors. We do not yet know who will be building housing once the market does revive. Undoubtedly, other ventures like this one will be formed from experienced people coming out of large companies. The point is that it will be difficult for the larger developers to find the economy of scale to build infill.
So City Ventures is attempting to establish a foothold with an urban land pipeline. To be the “go-to guys,” as Pauker puts it, “we needed to start now.”
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Mainstream Home Prices May Be Rising, But Luxury Properties Still Offer Deep Discounts
October 3rd, 2009 categories: Our Market
Seeking Real Estate Bargains? Try Looking at the High End
By BRETT ARENDS
Falling real estate prices are becoming as much a feature of high-end neighborhoods as ocean views, infinity pools and four-car garages.
While the latest data suggests prices for mainstream homes may be stabilizing after several years of pain, the news for luxury homes isn’t looking as good.
That’s bad news for sellers, naturally, but anyone in the market for a home listed for $2 million or more will find deeply discounted asking prices—and may be able to command even lower prices.
On Tuesday, data from the Federal Housing Finance Agency showed that average home prices ticked up 0.3% nationwide between June and July, including a 1.6% bounce on the west coast. The gains are modest, and they are partly influenced by the season—higher-end homes tend to sell better in late spring and early summer, as families try to move before the school year. Analysts are disappointed the rise was not higher.
Nonetheless, prices have now risen three months in a row. And compared with the disastrous events of the past few years, anything other than Armageddon is apt to raise spirits.
But these numbers only relate to homes purchased with conforming loans backed by the FHFA—in most areas, that describes mortgages of up to $417,000, or up to $713,000 in the country’s most expensive regions.
That overlooks luxury and high-end homes, where the outlook remains bleak.
“I would say we’re 40% off 2007 prices for everything,” says broker Chad Rogers, who covers the area from Malibu to Hollywood Hills for Hilton & Hyland, a Beverly Hills real-estate firm. “We’re now seeing prices consistent with where we were back in 2003.”
“The $10 million to $30 million properties are on the market for a very long time,” says Cathy Wood, a real estate broker covering Beverly Hills and surrounding areas for realty firm Gibson International. “They’re seeing a lot of price reductions.”
Realtors, she says, “are now selling $500,000 condos, when they used to sell $5 million homes.”
Across the country in hedge-fund haven Greenwich, Conn., local broker Eric Bjork at Prudential Real Estate finds a similar effect. “There’s a new level of value being set,” he says. “The $8 million [homes] are selling for $6 million, and the $10 millions are selling for $8 million. When you do the math, it looks like an adjustment of 20% to 30%.”
You’ll find similar anecdotal data in several high-end markets. But real estate Web site Trulia.com, which tracks listing prices on multiple listing services across the country, took a look at what’s happening to listing prices for homes over the $2 million mark.
Such homes only account for about 2% of the properties listed on the site, but represent 25% of the total price reductions by value. Overall, sellers listing homes for more than $2 million have dropped their asking prices by a total of $7 billion, with an average price reduction of 14%. The average for all properties tracked by Trulia is only 10%.
Data for individual Zip codes is intriguing, whether you’re in the market or you just like to rubberneck. According to Trulia data, 28% of the homes currently for sale in Beverly Hills (Zip code 90210) have dropped their price, with an average discount of 11%. In Aspen, Colo., (81611), 39% of the homes have cut their price, by an average of 16%.
On New York’s Upper East Side (10065), no less than 40% of the homes have slashed prices—and by an average of 18%. In California, some of the most exclusive areas in Newport Beach, Big Sur and Monterey have seen a third of the sellers reduct prices, by an average of about 15%. Malibu? More than half have cut prices.
Chip Case, economics professor at Wellesley College and one half of the Case-Shiller index duo, says that some of these markets may be finally catching up to the wider housing market crash. “That level was more in the hold-out category,” Mr. Case says. “Up until recently the foreclosures weren’t hitting that level .But they are now. There’s no question about that. You’re seeing some contagion from the prime level to the luxury end.”
Bottom line: At the high end, it’s a good time to be shopping for that dream home.
During—and after—a bubble, investors often hope that “quality assets” will hold value. It’s usually a vain hope. Just ask people who owned luxury condos in Tokyo after 1990, or investors in Cisco Systems (CSCO) after the tech-stock bubble popped. Real estate is not that different.
Sooner or later, even rich homeowners need to sell. They get divorced. Their company collapses. They relocate or retire. And, when they get tired of waiting, they cut their price. Factoring in taxes, upkeep and the opportunity cost of keeping money in a non-performing asset, an empty luxury home may be costing owners a lot just by sitting there. That gives them a powerful incentive to make a deal.
Write to Brett Arends at brett.arends@wsj.com
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