|Third Quarter 2003 AV News Briefs:
2003 - AV News Briefs:
Antelope Valley News Release
- July 1, 2003
LAWA Hires Marketing Exec for Air Service
Los Angeles World Airports has hired Mark Thorpe as director of
air service marketing for LAWA's three commercial airports: LAX,
Ontario, and Palmdale. Thorpe's primary job will be to balance international
and domestic service at LAX, increase service at Ontario, and resume
commercial service at Palmdale. LAWA officials say that Thorpe has
significant aviation and marketing experience. Thorpe has helped
airports in Atlanta and Philadelphia with their air service marketing
and also helped UPS in it's successful bid to gain access to China.
Thorpe will also be responsible to monitor and interpret complex
FAA regulations and monitor federal laws, which includes bi-lateral
treaties between the US and foreign countries. LAWA's long-term
goal is to regionalize passenger and air cargo service, meaning
they want to disperse air traffic around the county to relieve congestion,
both in the air and on the ground.
|Antelope Valley News Release - July 14th,
Watch-n-Wager at New Fairgrounds in
Lancaster to Open
The Watch-n-Wager, located at the new Fairgrounds on Ave H, just
west of the Fwy. 14, will open Wednesday, July 16th. Called The
Turf Club, the opening will be "soft", with a grand opening
ceremony held on July 23rd, which is also opening day at Del Mar
Racetrack. The facility will be 18,000 sq feet. The facility has
over 100 screens/TV monitors for satellite wagering at horse tracks
around the country. This year's annual Fair, held around Labor Day,
for one last time, will be at the old Fairgrounds on Ave I and Division
Street. The new facility will have individual seats with personal
screens and Internet hookup capabilities. There will also be a large
restaurant, a bar area, and a smoking patio.
|City Ranch area: Anaverde
by Empire Land and KB Homes is moving forward as the grading
has begun. The first 400 acres will consist of 450 homes
on varying lot sizes. Prices will start at $135,000 and top out near
the $350,000 level. There are five homebuilders for the first phase:
KB Homes, Beazer Homes, Forecast Homes, Western Pacific Housing,
and Richmond American. Empire plans to create a residential-commercial
core that is pedestrian friendly- wider sidewalks, narrower streets,
and garages that face alleys behind homes. Lot sizes will range from
4,000 sq feet to 7,200 sq feet. The first school is being renegotiated
and will be part of the Westside School District.
When completed, the entire master planned community will consist of
|Here is a story that a client told me,
that I found amazing. My client's friend sold an 800 sq ft home in
Burbank. The lot size was 50' x 150'. He sold it to a builder, who
then tore it down to build on it. Price paid was ...$510,000. That
is a lot of money for a 6,250 sq ft lot! This is one reason why our
home market up here is doing so well...buyer’s in nearby markets
are being "priced out" of their market, and pushed up here.
a long time homebuilder in the AV, says that they will close escrow
(sell) on 28 homes in July. EC also says they see no signs that the
new home market is cooling off. Neither does anyone else.
This month I am going to address the
subject of market value. There are two basic types
of market values, i.e. types of land, in the AV: investor
properties and developer properties. Developer
properties are parcels that a residential, industrial, or commercial
user will buy to build out. Developer parcels have all of the necessary
requirements to be developed: access, utilities, the desired size,
etc. Investor parcels will lack many or all of these features, and
thus cannot be economically developed.
The market value of an investor parcel is determined by only one
thing- the price an investor is willing to pay to tie up his money.
Developer parcels, because they can be turned into a finished product
and resold or creates an income stream (i.e. a business), are worth
more to a developer than to an investor. End users add value to
a property by building it out. For this reason, developer type properties
will sell for higher prices than investor parcels. Presently, this
is why land values on developer residential parcels have sky rocketed
over the past year- homebuilders are here in force bidding against
each other. This explanation leads us into why many land listings
never sell: many are investor parcels that have developer prices,
meaning they are over priced in relation to the properties utility.
An investor should never pay a developer price for their land.
A good land investment strategy is to find a "developer parcel",
or a parcel that is almost a "developer parcel", that
is "investor priced". If one can do that, one has a much
better chance of re-selling their land for a profit.
Supply closed out
June at 1,755, down 1.4% from the previous month of May (1,780).
This is the lowest level since March of 2002. At that time though,
supply was rising, now it is falling. Strong demand is now
beginning to draw down supply. This is a process that will
be slow and gradual, and will not move in a straight line. Over
the ensuing months though, I do expect to see the supply number
work it's way lower. Buying pressure is beginning to over take supply.
|Demand: June, at 119 land
sales, was another month that was stronger than the previous
month. Compare that number to June of 2002 (47), and you
can see just how much stronger the market is today, vs. 1 yr ago.
This year, each succeeding month has had more land sales than the
previous month. That is a definition of a rising trend. On a short-term
basis, I am a bit concerned that this market could show signs of exhaustion-
meaning that buyers will back off from the higher prices, which will
result in fewer sales. If that does happen, it would only be a temporary,
as the market consolidates the big move it has had over the past year.
Rising land sales, falling supply,
and rising prices; sounds like a good definition of a bull market
to me. Not every area of the AV is experiencing rising
prices. Based on volume, I am calling April of 2002 as the beginning
of this bull market in land. If you are interested in getting into
this market, the sooner you call me the better. Not that I will
rush you into our market, but the sooner I know your buying criteria,
the better. As this market ages, it will get harder and harder to
find good values. When I talk to homebuilders, they tell me they
see no evidence of their sales slowing down. Residential agents
tell me that resale supply is tight, which obviously favors home
sellers. The housing market cannot slow down until supply begins
to exceed demand. Based on current conditions, we are nowhere near
|- Frank Donato,
presented above has been compiled from reputable sources, and is
deemed reliable but not guaranteed. All opinions expressed are those
of the Author.
|August 2003 -
AV News Briefs:
As a by-product of the strong growth
in the AV, the Lake Los Angeles area, due to a
16% increase in enrollment last year, is getting a new elementary
school. Saddleback Elementary School will be built
on 10 acres at the cross streets of 150th St East &
Ave N-12. Construction is expected to begin in Jan of 2004,
with completion slated for June of 2005
Saying, "Times demand that we change",
Los Angeles Mayor James Hahn has put forth a $9B
proposal to improve security and efficiency at LAX. The
plan also includes revamping gates to accommodate larger jets, reducing
the overall number of gates, reconfiguring runways, and limiting
the number of travelers to 79M per year. One of the over all goals
of the plan, is to spread out air traffic among other smaller airports.
"Other smaller airports" is a direct reference to Ontario
and Palmdale, also owned by Los Angles World Airports.
LAWA has a joint agreement with the Air Force to allow 50 operations
per day at the existing Palmdale Regional Air Terminal. Palmdale
last had commercial air service in April of 1998. LAWA has already
spent $1M rehabbing the terminal and has hired a marketing firm
to recruit one or more airlines. Mayor Hahn fears that failure to
modernize will result in LAX losing its status as an international
gateway. Hahn has the support of Jack Kyser, chief
economist of LA County Economic Development Corp.
a movie studio headed by Steven Spielberg, has
a construction crew of 100, building a set inside of site
9, Plant 42. Site 9 is located near 30th St East
and Ave P, and is the site abandoned by SR Technics. DreamWorks
has leased it for the shooting of a romantic comedy called "Terminal",
which will star Tom Hanks and Catherine Zeta-Jones. The crew is
building a huge airport terminal inside site 9. Actual filming is
scheduled to begin on Sept 30th. As many as 600 "extras"
per day may be needed for the shoot. The film should be released
|Palmdale's new Sam's Club, on 10th
St West at Ave O-8, is progressing on schedule and should
be open by August 27th. Over 5,000 people have put in applications
for $8-$10 per hour jobs at Sam's Club. Sam's Club is located just
1/2 mile north of the 1M sq ft AV Mall. The west Palmdale
Wal-Mart, now located in the Promenade, on Ave P, just east
of the Fwy 14, will relocate to the Sam's Club center. Wal-Mart
will reopen this store as a super Wal-Mart, offering groceries
|Trader Joe's, under construction
in west Palmdale, at the Armagosa Commons, on 10th St West,
will be open for the holidays. Trader Joe's, at 12,000 sq feet, was
the last of the major tenants to sign on at the "Commons".
Other retailers include: PetsMart, Shoe Pavilion, Dress Barn,
TJ Maxx, Bed, Bath, & Beyond, and Circuit City, which
is moving in from Lancaster. Only a few smaller spaces are available
for lease in the “Commons".
|Anecdotal evidence is pointing the way
for Kohl’s Dept store to open up in the new
Sam's Club shopping center, at 10th St West & Ave O-8.
While Kohl's is not confirming the move, the site plan for the center
is being modified to specifications that meet a specific set of criteria
that Kohl's demands for any of their new stores. Kohl's is an upscale
dept store that emphasizes value pricing. The new Kohl's would be
in the area of 90,000 sq feet. The AV far surpasses Kohl's minimum
demographic requirements, with a median household income of $63,000.
Kohl's requires at least $40,000. Kohl's has 7,000 employees and 450
|A low income senior housing project, called
Aurora Village I, just south of Ave J-8 on 15th St West in
Lancaster, is proposing to build 140 more senior
housing units, next door, which is the SE corner
of 15th W & Ave J-8. Aurora Village II would be a 3-story
building with an interior courtyard. The developer says he has a waiting
list of 100 for Aurora Village II. The 135-unit Aurora Village I,
opened in 2001, and took 4 months to fill up.
The Southern Cal Assoc of Govts
is asking city officials of Victorville, Palmdale, and Lancaster
if they are willing to grant more residential density in exchange
for more roads, parks, and school and water money from the state.
SCAG is looking for places where Cal can grow. Palmdale's general
plan, which includes 103 sq miles, can accommodate 58,000 more homes,
for a total population of 450,000, when completely built out. Lancaster's
general plan includes 94 sq miles, and could take on 58,500 more
homes, with a total population of 490,000, at full build out. SCAG
says this is far short of the 600,000 new homes that So Cal will
need by the year 2030. To accept such growth, Palmdale and Lancaster
would have to change their general plans. Between now and Jan 2006,
SCAG will be holding public meetings to gauge public opinion on
this issue. Comment: With 3,400 sq miles in the Antelope
Valley, both cities could annex more acreage as needed. East Palmdale
has 1,000's of industrial acres that could be rezoned to residential.
Lancaster could reduce the number of acres in the Fox Field Specific
Plan area, which right how approaches 6,000 acres.
|The Turf Club, the
Watch-n-Wager at the new Fairgrounds, held a soft opening
on July 22nd. The Turf Club is 23,000 sq feet and has a seating capacity
of 200. Turf Club officials expect to do $20M a year in off-track
betting, of which 2% goes to the AV Fair board to help put on the
annual Fair. The balance of the new Fairgrounds will be ready for
next years Fair-August 2004.
|You may recall from a previous newsletter,
that homebuilder and developer, Andrew Eliopolus,
had his 90-unit apartment complex in Rancho Vista
voted down by the Palmdale City Council. Eliopolus
has filed a claim for damages with the City of Palmdale in excess
of $2M. The City Council voted down the project, even though the property
is master planned for apartments, and even though the planning commission
approved it. Public pressure from residents in the Rancho Vista area
was the reason the City Council voted it down.
Ronald Reagan, who as President,
authorized the building of 4 "Nimitz class" aircraft carriers,
has now had one named after him. The USS Ronald Reagan was commissioned
(put into service) at the Norfolk, Va. shipyard on July 12th in
a ceremony attended by 20,000. The ceremony was covered by the Fox
News Channel. The USS Ronald Reagan is 20 stories tall and can go
20 years until it needs refueling. It will carry a crew of 6,000,
80 planes and have a life expectancy of 50 years. The flight deck
of the USS Ronald Reagan is 4.5 acres. A plane landing at 150 mph
will come to a stand still within 400 feet.
As President, Reagan strongly believed that
"maritime superiority" was a must, and that, "We
must always be prepared, so that we will always be free". Reagan
believed in "peace through strength", and with 90% of
the world's population living within 200 miles of the ocean, the
USS Ronald Reagan would help achieve that goal with the 11 other
Nimitz class carriers. The USS Reagan will take 5 weeks to make
its way to San Diego, from where it will be based. Currently, the
USS Ronald Reagan is the only ship named after a living President.
That may change, as the last of the Nimitz class carriers, now under
construction, will be named the USS George Herbert Walker Bush.
George Bush senior, as an 18/19 year old, flew 46 missions off of
US carriers in WWII. He was shot down twice; once being pulled out
of the ocean by a US submarine.
|In late July I took my kids to Sea World
in San Diego. While I was buying a stuffed Penguin for my 2 yr old,
in a gift shop, the man was next to me struggling to count the proper
change for his purchase, also a stuffed penguin. The man remarked
to the sales clerk, "I don't know how to count the coins in my
hand." The sales clerk looked puzzled, so I intervened to help
and told the sales clerk, "He is a foreign visitor, he is not
familiar with US coins". I then asked the man, "From what
country are your visiting?" I expected him to reply with a Middle
East country, but I did not expect him to say, "Iraq." Knowing
what this man, his family, and country had been through the past 30
years, a chill went through me. It was almost like meeting a holocaust
survivor that sense that you looking into the face of history. Immediately,
I patted the man on the shoulder and said, "congratulations."
The man knew, without explanation, that I was of course referring
to the liberation of his country by US forces. He smiled broadly,
and began nodding his head in agreement, saying "thank you, thank
you". Then, thinking that a pat on the shoulder was not good
enough, I grabbed the man's hand and shook it vigorously,
and repeatedly said, "Congratulations".
As we walked out of the gift shop together, I took him over to
meet my wife, who was waiting for me. My wife was amazed to meet
someone from Iraq so soon after Saddam's removal. It costs a small
fortune to travel globally, especially in terms of Iraqi wages.
The man told us he was here with 12 other Iraqi's competing in an
archery tournament. He then pointed to a group of men standing nearby.
I remarked to the man, "George Bush must be very popular in
your country." The man said, "Oh yes!" The man then
said, by traveling in the US and seeing how Americans live (their
standard of living), "We want the same thing." I told
him that all Americans were pulling for them to make it. He was
very grateful and happy. We then parted. You will never convince
me, WMD or not, that we did not do the right thing in removing Saddam's
regime. This incident did not shape my opinion on this issue it
only reinforced it. Most of us were very fortunate to be born into
freedom. We were born into freedom because previous generations
were willing to pay the price to maintain that freedom and pass
it on to us. Who knows what terror or future disaster has been avoided
by the removal of Saddam.
|On August 1st, Northrop Grumman
rolled out it's first production model of the Global Hawk,
an unmanned surveillance plane. The Global Hawk flies a pre-programmed
mission, and is equipped to carry munitions as well. Northrop Grumman
has a contract to build 7 per year, for a total of up to 50, for the
Air Force. The US Navy has also ordered 2, with the
Coast Guard also considering it's use. Australia and Germany have
expressed an interest in the Global Hawk as well. The Global Hawk
is built at Plant 42 in Palmdale. The Northrop Grumman
facility, at Plant 42, can produce up to 24 Global Hawks per year,
changed from last month, nor is it likely to over the next several
months. Every residential agent I talk to, echoes the same sentiment,
"supply is tight, and resale home prices keep going up".
Even veteran agents and brokers of the housing market, just shake
their heads in disbelief as prices keep marching upward. New homes,
which have the ability to create new supply, have strong sales as
well. This is going to go on until something changes the current supply
(thin) and demand (very strong) ratio.
Here is an
example of what I m talking about. This story was relayed to me
by a Coldwell Banker agent. A 1500 sq ft home in east Palmdale,
that she had listed, received 9 offers. The home sold for $5,000
over full price. One would have to think, that, as new homes are
sold into the resale market, at some point in time, supply will
exceed demand and this market will rest or pull back. But when will
that be? Right now, with the power this housing market exhibits,
we are not there, nor likely to be, for months, perhaps years.
When new homes are built, the supply will hit the market in phases.
The timing of new housing projects is all different, so future supply
will hit the market at different times. This is good because it
gives the market a chance to absorb new supply before more new supply
hits the market. For now, this market is strong and will
be so for the foreseeable future. Nation wide, the housing
picture is about the same, as new home sales rose in June by a record
Brokers and agents in the Rosamond market, say that they are getting
play from both the Palmdale-Lancaster and Bakersfield markets. Homebuyers
in the Rosamond market are coming from both areas. Although the
Rosamond market does lack the wide range of home choices, home prices
are considerably lower, and with that, property taxes are lower
too. More choice is on the way for the Rosamond market.
The McRae Co. is preparing to build 250 homes on
Rosamond Blvd, near 40th St West. Moreland Consulting,
a Bakersfield engineering firm, say they have half a dozen projects
they are mapping for the Rosamond area.
A new Jack-in-the-Box is being built in
Rosamond, at 25th St West & Rosamond Blvd.
It will be a prototype restaurant, including a CITGO gas
station, and should be open by the end of September.
From June 2002 to June of this year, median home prices
have risen in Rosamond 18.6%. In the same period, west
Palmdale home prices were up 11.8%, and east Palmdale
up 17.3%. West Lancaster home prices were up 13.2%;
with east side Lancaster up 28%. East side home
prices, which lagged badly when this housing boom kicked off, are
now catching up.
|Land Market: Why
do we invest in land... to make money, or collect parcels? It is OK
if one wants to collect parcels. Collectors enjoy holding their land
as the market moves up. Holding an asset in a rising market makes
one feel smart. Some of these collectors think they will be able to
sell their land before the cycle tops. The reality is, that most collectors
will get stuck with their entire inventory as the market heads lower.
And, as fate would have it, some dire personal need will come up,
probably when the market is weak, that requires that they sell one
or more of their parcels. As I have told clients many times...the
market rarely cooperates with sellers that have to sell.
those that have the primary motivation to increase the balance in
their cash accounts, I have this word of advice. Do not fall in
love with your land. The investors that I know, that are successful
in this business, are always looking for selling opportunities as
well. Do not be afraid when you sell your land that someone else
might do better with it. Do not try and squeeze every last dollar
out of each and every parcel. Some parcels are special, and should
be held. I am not against land banking, but it must be done intelligently.
Most parcels should be sold when the opportunity arises.
Selling opportunities, sometimes, can come
up much faster than the seller anticipates. Example: those that
bought land in 1988 had a great selling opportunity only one year
later. As it turned out, 1989 was the best selling opportunity out
of the next 13 +years! I can’t tell you how many times over
the past 10 yrs I heard investors tell me they didn't sell because
they didn't need the money. Do not worry about what to do with the
proceeds if you sell. We can always figure that out later. If you
have to, you can put the proceeds in a bond fund or a CD while waiting
for another opportunity. If you are a cash seller, we can do a 1031
exchange into another piece of land, and defer paying the taxes.
There will be other deals that present themselves. Some will be
better than what you previously sold; some may not. One thing that
20 + years in real estate has taught me, is that, there will always
be another deal.
Being a seller as well as a buyer is actually
a conservative and defensive strategy, and forces a discipline upon
oneself (not get over invested). For most of us, the original purpose
of land investing, or investing in anything, is to make money. Try
and remember that. After all, it's only dirt.
|I have it from a
very reliable source, that a view lot in Godde Terrace Estates
has sold and closed escrow for $120,000. This was a sale that was
outside of our MLS, so it will
not be reported to the real estate community. These lots were developed
by the Godde family and sold in 1987 -88 period. Since that time they
have been subject to the forces of the resale market. When the market
was weak in the mid 1990's, I know that two of these lots actually
were bought for under $30,000. Godde Terrace is located in the
general area of 65th St W and Ave M-8. These lots
are terraced into the hillsides. Earlier this year, I wrote an offer
for $70k all cash on one of these lots. The seller accepted the offer,
but the next day, the buyer changed his mind. I tried to convince
the buyer that, at the very least, he was making an economic/investment
mistake, by not going forward. The buyer would not relent, and canceled.
The sale mentioned above, for $120k, might be the highest price ever
paid for a lot in GTE.
|Is this a good time
to be investing in AV land? With a housing shortage through out California
at almost epidemic levels, the Antelope Valley, with it's 3,400 square
miles, is being touted by many as one of the long term solutions (next
20 years) to California's housing needs.
closed out July at 1,768, up less than 1% from last month. This reverses
a 3-month trend of falling supply. On a macro basis, it still appears
to me that supply is in the process of being reduced by a market with
increasing demand. That trend was interrupted in July, but I suspect
will resume as we move into the fall. Trends do not move in a straight
line; they are always zigs and zags along the way. If this market
is going to repeat it's behavior from the 1988-90 market, and I do
emphasize "if", we have a long way to before any signs of
excessive speculation show themselves. In May of 1989, which for the
most part, was the top of that market, the supply figure was 567.
That is not to say we have to go down to that number for a "frothy"
market to occur, but we have to get a lot closer than we are now.
July (87) land sales pulled back a bit. It was the first month below
100 land sales since February of this year. Last month I expressed
a concern, that on a short-term basis, the market could begin to
show signs of "exhaustion" at any time, as buyers back
off from some of the higher prices they are being asked to pay.
We could be in the early stages of that exhaustion and could begin
consolidating the year's gains. Certain segments of the market need
some time to get used to the new higher prices. Consolidation or
not, 2003 is shaping up to be a great year.
Year to date, January thru July, shows land
sales are up 91% in 2003 vs the same period in 2002. A consolidation
is nothing more than the markets way of taking a rest, digesting
previous strong market activity. They are a normal part of market
behavior, and good, in that, consolidations have a way of extending
market cycles. Eighty-seven land sales in one month, is still a
very good activity.
|- Frank Donato,
presented above has been compiled from reputable sources, and is
deemed reliable but not guaranteed. All opinions expressed are those
of the Author.
- AV News Briefs:
You may recall that James
Hahn, mayor of Los Angeles, has proposed a $9B
upgrade to LAX. Sheldon Plotkin, a member
of the Transportation Task Group for the Southern California
Federation of Scientists, has suggested, that for $2B,
LAX and Palmdale Regional could be linked by a high speed
rail line. The train's speed would be 180 mph and get passengers
to and from LAX and Palmdale in about 30 minutes. Plotkin says this
would make LAX-Palmdale one transportation hub, transferring passengers
from gate to gate, at either facility. An interim plan to get this
going, would be a fly-away bus system located near the AV Fwy. 14,
with the 45 mile rail system eventually replacing the bus system.
The widening of the Ave S corridor
is about to begin. Ave S, from the Fwy 14 to 20th St East, will
be widened to four lanes. The improvements will bring turn lanes,
traffic lights, streetlights, sidewalks, bus benches, bike paths,
drainage, and landscaping to Ave S. Once begun, the improvements
will take 18-20 months.
is building a 16,000 sq ft commercial center on 10th St
West, between Ave L and Ave M. The center's first tenant
will be Sun Country Bank, moving there from their
existing site further north on 10th St West. The center, in general,
will provides offices and store sites.
|Lancaster Mayor, Frank Roberts,
in a speech to the AV Chamber of Commerce, touted
his city's recent growth achievements: the opening of the
Watch and Wager at the new Fairgrounds, a bike path
along Sierra Hwy, year to date- approval of 1,900
single family lots- double from this time last year, the
soon to begin Fox Field Ave G improvements, and the
positive business climate in Lancaster that has created 8,000
jobs over the past 12 years.
|On August 14th, Rosamond broke
ground on their first school since 1964, Westpark Elementary
School on 35th St West, south of Rosamond Blvd. The school
will have 5 buildings, 25 classrooms and cost $8M.
|On August 21st, AV residents were given
the opportunity to comment on LAX's $9B renovation plan
which has been put forth by Los Angeles Mayor James Hahn.
A public hearing re: LAX's master plan was held at Palmdale
Regional Airport. About 85 people, about 1/2 of which were
AV residents, showed up for the public hearing. Most of them expressed
strong support for the reopening of Palmdale Regional as a solution
to thin out LAX air and ground traffic. Hahn's plan focuses on enhancing
security and safety at LAX. Hahn has previously stated his support
for using regional airports, such as Palmdale, to disperse air traffic
through out the county.
|On Monday, Sept 15th, just 3 weeks before
the recall election, Arnold Schwarzenegger is holding
a $250 per plate fundraiser at the new AV Fairgrounds.
As of late August, ticket sales for the fundraiser were described
|Wal-Mart's Sam's Club, in west Palmdale
opened up on Thursday August 28th. As of August 25th, Sam's Club officials
report they have sold over 15,000 memberships.
|It looks like the next stop for
Eliopulos vs. the City of Palmdale, will be the courtroom.
Earlier this year, in May, Eliopulos had his apartment complex in
Rancho Vista denied by the Palmdale City
Council. Denied even though the land is master planned for
apartments, denied even though the planning commission had already
approved of the project, denied even though the Mayor said it was
a mistake to do so, and denied even though the City's own attorneys
and three land use specialist, advised against the denial. Eliopulos
has filed a claim with the City for formal damages, ranging in the
million$ of dollar$. The City, predictably, has denied the claim,
so the next stop will be the courtroom. The apartments were to be
built (and still may be) on Rancho Vista Blvd & Ave O-8.
Nationally, July housing starts
(released on Aug 19th), were the strongest since April of 1986.
Again, on a national level, July new home sales were at a record
high. However, this reflects closings in July where homeowners already
had their interest rate locked, so it does not reflect how home
buying behavior may have been affected by the rising mortgage rates
of July and August. July new home sales were down -2.9%, but were
still very strong as they were at the second highest level on record.
Yes, mortgage rates have risen, but the housing market is nonetheless,
Pacific Communities, with their
gated Renaissance tract, near 50th St West & Ave N,
reports that sales are two phases ahead of construction. This leaves
only 15 or so lots left for the last two phases. PC has also told
me that they are planning another gated tract along Ave N, from
35th St West to 40th W. That one is still in the mapping stage.
|KB Homes has broken ground on a group
of new homes on 55th St West & Ave L-12. With
a park and school nearby, they should sell well to families.
|As of August 17th, year to date, homebuilders
have sold 1,161 new homes in the AV. That is an average of
about 154 new homes sold per month. If this monthly average holds
up the balance of the year, total new homes sold in 2003 will be around
the 1,857 level. Last year, in 2002, new home sales were 1,162. This
would be a one-year new home sales increase of 59%. As impressive
as this is, we still have a long way to go until we approach the record
year of 1990, which had 5,000 new home sales.
|Wary of the ugly ending the housing market had in 1990,
homebuilders this time around are being more cautious. Many are building
out their projects in a more disciplined manner, going with smaller
phases. In the last cycle (1988-90), when a home builder had a 100
home tract, they went ahead and built them all out in just 3 or 4
phases. Today, a similar 100 home tract may have just 10-14 homes
per phase. Builders are leery of the market making an abrupt turn,
and getting stuck with unsold inventory. If history and human behavior
is any guide, this current strong home cycle will not end until home
builders become over confident and complacent with market risk. I
see no signs of that happening yet.
out August at 1,755, remaining in the mid 1700 range, which it has
done since December of last year. Watching the supply is important,
because if there is any drastic change, up or down, it will tell us
something about the state of mind of the buyers and sellers. If supply
were to suddenly enlarge, it could be telling us that demand is falling
off in the face of more sellers that want to sell. On the other hand,
if supply were to suddenly contract, it would be telling us that buying
power is beginning to overwhelm supply. Obviously, to understand what
the supply number is telling us, we must look at it in relation to
the demand number. Right now, the two have a good balance, allowing
for an orderly market.
August (110) land sales came roaring back from July's pull
back (87). Last month I anticipated that the land market could be
moving into a consolidation phase, but with August sales moving
back over 100, that consolidation could be happening above 100,
instead of below 100. Five out of the last six months have had land
sales of over 100. Call it whatever you want, but land sales are
very strong, and probably will remain so for the foreseeable future.
|- Frank Donato,
presented above has been compiled from reputable sources, and is
deemed reliable but not guaranteed. All opinions expressed are those
of the Author.