Building Boon

New home construction is back

Back Article Apr 1, 2012 By Carol Crenshaw

Some developers are building again, prodded by increases in buyer traffic at model homes and an uptick in sales over the fourth quarter of 2011 and the first months of 2012.

Placer County’s building activity leads the Capital Region. A smattering of new homes also are sprouting in Roseville, Elk Grove/Laguna and the Highway 50 corridor.

“We’re seeing an increase of anywhere from 25 to 30 percent across the board in traffic, and we’re seeing 25 percent increase in sales,” says Dale Billy, president of Lennar Homes Northern California division. “The industry as a whole has seen an increase across the board.”

Lennar Homes is constructing single-family homes in Roseville, Elk Grove and El Dorado Hills. Its late-February grand opening at Shenandoah at Blackstone, a master-planned community in El Dorado Hills, drew 450 people. Billy says he is optimistic about 2012 sales at Aria at Madeira, a community of single-family homes in Elk Grove priced from $302,990; and Laurel Grove at West Park in Roseville, a similar housing collection priced from $292,490.

Roseville accounts for 35 to 40 percent of the new-home construction in the region, according to Dennis Rogers, senior vice president of governmental and public affairs at the North State Building Industry Association. West Roseville, particularly the Fiddyment Farms and West Park neighborhoods, are attracting developers.

Joining Lennar in the new-housing construction in West Roseville are KB Home, Shea Homes, Signature Homes, Meritage Homes Corp. and Elliott Homes Inc. KB Homes just unveiled Valley Meadows in Fiddyment Farms, a single-family home collection that features three- to six-bedroom houses around parks and an elementary school.

Elk Grove is trailing Roseville but gaining strength. Greg Paquin, president of The Gregory Group, a market research firm in Folsom, says he isn’t surprised by new construction in the popular Elk Grove/Laguna area.

Taylor Morrison Homes is leading the construction with three new housing projects in Elk Grove: Rancho Verde, Mirabela and Teresina at Madeira. The New Home Co., Lennar, Standard Pacific Homes, William Lyon Homes and K. Hovnanian Homes also are building in Elk Grove. Sales at Lennar’s Madeira project are up by more than half this year compared to last, Billy says.

“We’re seeing an increase of anywhere from 25 to 30 percent across the board in traffic, and we’re seeing 25 percent increase in sales.”

Dale Billy, president, Lennar Homes Northern California division

Elk Grove could experience an increase in new-home interest now because the abundant foreclosures and resales that absorbed buyer interest over the past few years are dwindling, says Paquin.

Taylor Morrison, Shea, William Lyon, Lennar and Standard Pacific Homes all are offering new single-family houses in El Dorado Hills. Scheduled for next year, The New Home Co. plans to build 70 homes on 12 acres in the Blackstone area.

Taylor Morrison Inc. Homes’ Pinnacle at Blackstone has seen consistent sales, according to Michael Onstead, director of Coldwell Banker Development Services. Many Bay Area residents continue to migrate to El Dorado Hills for larger houses, roomier lots and a more suburban lifestyle, he says.

With spacious properties and scenic foothill views, the 2,541- to 3,402-square-foot homes being constructed at Pinnacle at Blackstone fit the needs of such buyers. Taylor Morrison Homes declined to comment on its sales and traffic.

Like El Dorado Hills, Folsom has desirable schools and new businesses, such as the newly opened Whole Foods Market. That, coupled with big, longtime employers such as Intel Corp. and a family-oriented environment, makes Paquin optimistic about new construction in El Dorado and Folsom.

KB, Elliott, Signature and Standard Pacific Homes are constructing houses in Folsom. And this summer, The New Home Co. is scheduled to begin building 128 single-family houses in The Parkway development of Folsom off Parkway North Drive and Blue Ravine Road. With Folsom’s recent annexation of 3,510 acres south of Highway 50 near Scott Road, thousands more new homes are expected.

The proximity of restaurants to new homes in Folsom and Elk Grove may be appealing to buyers, but overall optimism about the economy is sparking interest and activity.

“Folks are looking to buy because they feel more comfortable with the direction of the economy and their personal economic state,” Rogers says. “And new homes are more energy efficient, well-constructed and have less maintenance than the repos we have been seeing.”

People are also moving because they want to get on with life after putting plans on hold through the recession, Onstead says. Plummeting housing prices caused potential sellers to stall, but now they are ready to live in a place that better suits their lifestyle, he says.

“They know they can’t get what they want for their homes because the market has adjusted, but they have decided the market isn’t going to drop anymore,” Onstead says. “So for lifestyle changes, they are stepping away from their current homes, sometimes at a loss.”

The rocketing home prices of the mid-2000s will probably never happen again, and values will probably increase now at a reasonable rate, Onstead says. Also stacking the deck for people considering a new home buy are historically low interest rates, which we may never see again, he says.

While the builders are enjoying slight activity, Bill Ayres, first vice president at CB Richard Ellis, says new construction is far from returning to previous normal levels — even before the housing balloon. And when building increases at a regular rate, he predicts developers will be cautious.

“When the market does start up again, it will be with much smaller projects and smaller bites of the apple, mostly in infill locations,” Ayres says. “And to lower the price, they will increase the density, shrink the lot size and build small, two-story homes.”

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