Equal Housing Opportunity
AV News Briefs - By Frank Donato
 

Frank Donato is a long time Valley Resident and Businessman, and a V.P. Account Manager for Fidelity National Title. Frank currently serves as A.V.E.K. Water Board Director (since 1987), and has served as A.V. Fair Director (1997-2001) and North County General Plan Advisory Council Member (1981-1986). Frank is also a Wine Grape Grower and Consultant and Owner/Partner of Antelope Valley Winery. We thank Frank for sharing his knowledge and unique perspective on current issues!

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Fourth Quarter 2010 Antelope Valley News: Oct/Nov Nov/Dec


October/November 2010

Antelope Valley Existing Home News

September existing homes sales in the Antelope Valley were down -9.6% vs. August.  Year over year, they were also down (vs. Sept 2009) at -33.5%.  GAVAR, our local MLS, reported 472 homes sold in September, and 522 homes in August.  For the year though the average sales price is up +4.2% August to $148,158.  Versus Sept of 2009, prices are up 7.9%.  Characteristics of the AV home market include, large shadow inventory overhanging the market (banks own 8,000 homes, while the MLS has only 1,300), short sales which are taking longer to close out,  the foreclosure process is becoming more complex, with some banks imposing their own moratoriums to review foreclosure docs.  Expiration of the federal tax credit has also hampered the market.  The worst part of the foreclosure freeze, which some lenders have self-imposed, is that no one knows how long it will last.  If it drags out too long, it could freeze up the entire market.  Existing home sales would be stronger if there was more supply, if the banks would put more homes out onto the market.  Generally, more supply gives buyers more choice.   

California Housing News

Existing home sales for Sept rose +3.8% versus the prior month, to an annualized rate of 466,580.  Year over year though, home sales were  down -12.2% (vs. Sept 2009).  Cal Asso of Realtors expects existing home sales to be down -10% in 2010 vs. 2009.  In Sept, the median price of a California home was $309,900, down -2.7% from August, but up +4.5% year over year vs. September 2009’s $296,610.  CAR says that the inventory of homes under $500,000 continues “to be lean”.  The number of homes for sale over $1M is more than double of those under $500k.

Cal Housing permits, as compiled by the Construction Industry Research Board, were down -16% in Sept vs. one year ago.  Sept permits were down -31% vs. August.  Multi-family permits were up +27% vs. Sept 2009, but down -48% the prior month, August.  For the first 9 months of 2010, permits were up +17% vs. the same period in 2009.  During this 9 month period, SF homes were only up 1% with multi-family permits up +53%. Comment:  in most cases, building new SF homes makes no sense, nothing pencils (makes economic sense).

Antelope Valley New Home News

Antelope Valley Tract Builder’s Sales

1990-  total of all new homes sold- 4,900 +
1999-  total of all new home sold-     694  (The Siracusa Co.)
2002-  total of all new homes sold- 1,162 (Hanley Housing Report)
2003 - total of all new homes sold- 1,820 (Hanley Housing Report)
2004 - total of all new homes sold- 2,730 (The Siracusa Co.)
2005 - total of all new homes sold- 4,510 (The Siracusa Co.)  
2006 - total of all new homes sold- 2,584 (Hanley Housing Report)
2007 - total of all new homes sold- 1,720 (Hanley Housing Report)
2008 - total of all new homes sold-    906 (The Siracusa Co.)
2009 - total of all new homes sold-    669 (The Siracusa Co.)  20 year low

Of the major homebuilders in the country, with 1,000 or more homes sold this year, only seven have sold more homes in 2010 than in 2009.  Two of those seven homebuilders also build in the Antelope Valley- DR Horton and Richmond American.   The California Economic Forecast firm, says that in 2009, 1,300 construction jobs were lost in the Antelope Valley.  In California statewide, 55,000 construction jobs have been lost over the past 12 months. 

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Antelope Valley Aerospace & Defense

Oct 10- SpaceShipTwo, the commercial space craft being built by Scaled Composites of Mojave for Virgin’s Richard Branson, successfully completed its first solo glide flight.  The space craft glided to a perfect landing at Mojave Air & Space Port.  Richard Branson, owner of Virgin Galactic and Virgin Airlines, was in attendance.  SpaceShipTwo was carried aloft to 45,000 feet by the mothership, the WhiteKnightTwo.  The space craft was flown by two pilots from Scaled Composites.  The test flight took off at 7am and headed north over California City before being released to glide back to earth.  The test flight, considered a rounding success, was intended to test the aircraft’s handling and landing capabilities.  SpaceShipTwo is described to be the size of a business jet. It is reported that Virgin Galactic has collected $50M  in deposits from 350 future customers for flights into outer space at $200,000 per seat.  Passengers will experience several minutes of weightlessness and see the black sky of space, and of course have a fantastic view back to earth. 

Oct 28- SpaceShipTwo completes is second free flight test successfully.  Scaled Composites officials, the developer and builder of the aircraft, said the “aircraft performed flawlessly”.  The test was to the first as the aircraft was carried to an elevation of 45,000 feet, then released, and glided to a “spot-on” landing at Mojave Air & Space Port.   
    
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Antelope Valley News

Oct 1- The California High Speed Rail Authority is awarded a federal grant of $194M from the Federal Railroad Administration.  The funds will be enough for California to finish the preliminary engineering and environmental analysis.  The draft environmental report is scheduled to be done by July of 2012.  Once completed, passengers could travel from Palmdale to downtown LA in 27 minutes.  Much of the route of the train would be elevated or sunk in trenches or tunnels.  California will match the federal grant of $194M, dollar for dollar.  As mentioned above, NewsMax Magazine has reported that a Japanese bank has offered to loan California the $40B needed to build out the system.  The offer was made when Gov. Schwarzenegger was in the far east in September, viewing different high speed train systems in China, Japan, and Korea.

Oct 4- In a survey completed by Kosmont-Rose Institute, the City of Lancaster was found to be one of the top ten least expensive (most affordable) cities in Los Angeles County in which to do business.  The survey compares govt fees as a determining factor of what drives businesses to specific locations.  The survey also compares a variety of taxes and fees imposed on businesses, such as sales, utility, income, property, and business taxes.  The survey is best known as a tie breaker for companies that are contemplating a move or an expansion and have already determined the best combination of factors for them, i.e., quality of labor force, cost of housing, and proximity to suppliers and customers.  Kosmont-Rose officials did say, “That California, with its high sales and income taxes, its cities are at a cost disadvantage right out of the gate.”  Other least expensive cities in LA County and in the top ten were:  Agoura Hills, Bell Gardens, Diamond Bar, Glendora, La Mirada, La Puente, Santa Fe Springs, Walnut, and Westlake Village.  The ten most expensive cities in Los Angeles County were:  Bell, Beverly Hills, Compton, Culver City, El Segundo, Hawthorne, Inglewood, Los Angeles, Pomona, and Santa Monica.

Oct 4- Palmdale’s Regional Medical Center receives a certificate of occupancy from the Office of Statewide Health Planning and Development, a state agency.  This allows the hospital to staff their facility as workers will be allowed to move in, as well as the stocking of supplies.  Next step is for an inspection by the Dept of Health Services to receive an operating license.  Officials are hopeful that the hospital will be open for patients sometime in December.  At the opening, beds for 127 patients will be available, with expansion to 239 coming later.  The hospital will have 750 full time positions at the opening.  In total, the hospital is 380,000 sq feet, and being built on a hillside, varies from one to five stories.  Next to the hospital is a 60,000 sq ft medical office building, which at this point in time is 20% occupied. 

Oct 12- Fresco II, a unique Lancaster restaurant-supper club with live music, is moving to the site vacated by On the Border on the north rim of the AV Mall.  The new site, redesigned to fit the Fresco II type atmosphere for those seeking some night life as well, will sit 235 and is hoped to be open by early November.  Fresco II advertises a Mediterranean cuisine.

Oct 14- In the continuing saga of the Palmdale Chevrolet dealership, attempting to move to the Lancaster Auto Mall, a U.S. District Court judge in New York has temporarily blocked the move.  General Motors   had revoked the Chevrolet franchise from Rally Motors in Palmdale during GM’s restructuring in 2009, then months later awarded a new Chevrolet dealership to a Saturn dealer (whose Saturn line was being discontinued) at the Palmdale Auto Mall.  Lou Gonzales, after being awarded the Chevrolet line, and knowing he was losing the Saturn line, approached Lancaster and asked if he could relocate his new Chevrolet dealership at their auto mall.  Since the AV no longer had a Chevrolet dealer, Lancaster, like any city, was overjoyed at the prospect of landing a big name like Chevrolet.  The judge’s action, temporarily, prevents Gonzales from opening a Chevrolet dealership, and also temporarily prohibits the termination of the Chevrolet franchise with Rally Motors.  At issue:  is the GM wind-down agreement valid and enforceable.  For now, until Judge Patterson makes a decision, the Chevrolet dealership remains with Rally.  The City of Palmdale has also filed suit in Superior Court to prevent the City of Lancaster paying Gonzales $640k over 28 months to help pay for his move.  Pending the result of this suit, Lancaster is prohibited from paying any monies to Gonzales. The hearing on this issue is scheduled for Dec 13.  It is Palmdale’s contention that Lancaster’s financial incentive violates state law.  At issue:  is the transfer of the Chevrolet dealership the move of an existing business, or the opening of a whole new business.  According to state law, financial incentives cannot be used to lure existing businesses away from one to city to another, but can be used to attract a new business.  On Oct 31, as part of the GM restructuring, literally thousands of Chevrolet and other GM dealerships around the country are suppose to close, many of which are profitable and functioning.    

Oct 29- US District Court judge, Robert Patterson, lifts the stay against Lou Gonzales and his move to Lancaster to open a Chevrolet dealership at the Lancaster Auto Mall.  Gonzales told the local media after the stay was lifted, “It’s official and it’s over.  Judge Patterson has ruled in favor of General Motors to open up a Chevrolet dealership in Lancaster.”  The owners of Rally Motors, who have owned the AV’s only Chevrolet franchise since 1969, disagreed, they don’t think it’s over.  They will appeal; no date has yet been set for the appeal.  It appears that GM’s wind down agreement in 2009, which included Rally Motors agreeing to terminate its Chevrolet franchise for payments and other considerations, is being upheld and declared legal by Judge Patterson.   In Dec 2009, Rally Motors was allowed to appeal to GM to get back their GM franchises.  In June of this year, GM did reinstate to Rally their Buick, GMC, and Cadillac franchises, but not Chevrolet.  Shortly thereafter, GM awarded the Chevrolet franchise to Gonzales citing his superior sales record, vs. Rally Motors, when Gonzales sold the Saturn line (which is now discontinued). Gonzales says he will start moving into the Lancaster Auto Mall during the first week of November.  Rally Motors has appealed and will not give up.

Nov 3- The Pacific Wind Farm, located 3,700 acres west and NW from Mojave, on the east slope of the Tehachapi Mountains, is being hailed as an economic stimulus for Kern County.  EnXco, the developer of the wind farm, says the 140 megawatt wind farm will have $324M economic impact on the area.  In the short run, 1,000 temporary construction jobs will be created.  The project, during its development and construction, will generate $159M and another $8M per year over its 20 year lifetime.  An economic study indicates, that throughout Kern County, benefits will be seen such as new jobs, and a rise of income tax and revenues because of development, construction, and long term operations and maintenance.  The construction phase, which is expected to last 6-9 months, is forecasted to generate $44M in local wages.  Over the 20 year period of operation, the wind farm will create $165M in total revenue, support 60 full time jobs with a payroll of $5M.  Property tax revenues are expected to rise by $4M.  San Diego Gas & Electric has an agreement with EnXco to purchase the electricity generated by the wind farm.

Nov 4- Scott Cummings, manager of the AV Mall in west Palmdale, says that since Macy’s arrival in September, sales for all mall tenants have gone up 2%-3%.  Cummings also reports that interest in the mall’s vacant space has also increased, saying he has showed the empty Harris Dept store space 3 times since the arrival of Macy’s.  Shoe maker, Skechers, will open a store in the mall before Thanksgiving.  The restaurant, Yard House, known as an upscale eatery and for its wide selection of draft beer and classic rock music, will open next year in the spot vacated by the Cinemark theater chain.  Cinemark is now located on the NW rim of the mall.  In closing, Cummings said that Forest City, the mall owner, is committed to staying in Palmdale, noting that they have a 4 year plan to replace all of the air conditioners, with 9 having been replaced this year.   

Nov 5- Here is demographic data on the Antelope Valley from a report compiled annually by the AV Economic Alliance.
- average annual income in the LA County portion of the AV, $71,042
- average annual income in the Kern County portion of the AV, $67,054
- average household income in Palmdale, $74,379
- average household income in Lancaster, $66,840
- 52% of AV households are in the $50,000 to $150,000 income bracket
- the AV has a workforce of 225,000, of which 32,000 are unemployed
- Valley wide, the jobless rate is 14%
- 68% of the homes in the AV are owner occupied, vs. 49% throughout LA County
- 27,000 AV residents are attending college
- 18% of AV residents hold a bachelor’s degree or an advanced degree
- 80% of the AV residents live in the LA County portion
- 71,000 workers commute daily to work “down below”, some driving 2 hours or more round trip
- AV high schools have a 78% graduation rate

           
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Antelope Valley Land Market

"Supply and demand, in the end, determines the value of all things." 
     - Adam Smith, "Wealth of Nations" 18th century Scottish economist

Supply closed out Oct at 1,677, down a hefty 132 listings, or 7.29%, from last month (September).  We are only a 10.5% move to my long term target of 1,500.  I first forecasted that number in the fall of 2005.  Since a solution to the housing debacle is still years away, it does appear that eventually supply will go below 1,500. There is nothing magical about this level, except that, at the time of my forecast, supply was well over 3,000, and it seemed to me that a 50% decline in supply, before the Bear market was over, was probable.  The road to 1,500 will be paved by sellers giving up (capitulating) or taking their property off the market.  With the current weak selling environment well known, I do not expect new listings to come onto the market faster than those that leave the market, thus from current levels, over time, we should get falling supply,   As long as the housing market continues to struggle, so will the land market.   I see no indications that the housing market is on the mend, so I anticipate several more years of the type of land market environment we have presently- slow sales, a lack of buyers and declining prices. 
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Supply numbers in perspective:
Supply change vs. last month:    - 7.29%            
Supply change during 2010:      no change     
Supply change year over year:    - 5.83%
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Supply at end of Oct  2010: 1,677
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Supply at the end of 2009:  1,673
Supply at the end of 2008:  2,100
Supply at the end of 2007:  3,134
Supply at the end of 2006:  3,263 (market peak in prices)     
Supply at the end of 2005:  2,264 (market peak in sales volume)       
Supply at the end of 2004:  1,902
Supply at the end of 2003:  1,607
Supply at the end of 2002:  1,770
Supply at the end of 2001:  1,665
Supply at the end of 2000:  1,800
Supply  in  May  of  1989:      587 (market peak in price)
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Demand- Oct demand (28)  was up a tad, gaining 1 sale versus last month (September).  The trend of Bear market volume continues, a range of 20-40 land sales per month.  Most of months are coming in between 25-35 sales, but it can expand or contract as above.  One absolute prerequisite for the land market to get turned around is that housing must first return to normal supply and demand fundamentals.
Distress sales have to fall to historically normal levels, and of course, that would also include a draw own of the large number of foreclosures and the overhang of the supply of homes that banks hold.  As I said last month:  Do not think in terms of time; watch the housing market, when it gets healthier, land too will eventually start to improve.  When the MLS has more houses listed than the local banks and lenders own, that would also be a good start.  For the time being, we are approaching the “capitulation stage” of the market, where sellers accept any price necessary to get a property sold.  It is in this part of the cycle where prices are the lowest; it is the beginning of a bottom forming.  This is not to say that most properties are listed at market value; they are not, so “ignorance is not bliss” in this market, and what one doesn’t know, can cost one dearly.  That said, a great buying opportunity is coming our way.
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Land- Median Listed Prices

Median price this month =  $44,000
Median price one yr ago =  $49,000
Median price change, year over year:  - 10.2%       

Land- Average Days on the Market401

Demand numbers in perspective:   
Land sales year to  date-------- 316  (thru this month)
Land sales forecast 2010------- 379  (projected)
Land sales in all of 2009--------325                                                                             
Land sales in all of 2008------- 475
Land sales in all of 2007------ 1,637              
Land sales in all of 2006------ 2,648 
Land sales in all of 2005------ 3,376
Land sales in all of 2004------ 2,372   
Land sales in all of 2003------ 1,240
Land sales in all of 2002------   679
Land sales in all of 2001-------  407
Land sales in all of 2000-------  307
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As you can see from the average monthly sales below, on a projected basis, we are back to 2000-2001 sales numbers, which were at the tail end of the last Bear market, and 2 years before the 2002-2006 Bull market began.                      

Average land sales (in 2010) per month-  32
Average land sales (in 2009) per month-  27
Average land sales (in 2008) per month-  40
Average land sales (in 2007) per month- 129
Average land sales (in 2006) per month- 221
Average land sales (in 2005) per month- 281
Average land sales (in 2004) per month- 198
Average land sales (in 2003) per month- 103
Average land sales (in 2002) per month-  56 
Average land sales (in 2001) per month-  34
Average land sales (in 2000) per month-  26

November/December 2010

 Antelope Valley Existing Home News

Antelope Valley rentals- as most of us know, investors have been buying up a high percentage of the homes that fall into the foreclosure process.  Here are some amazing numbers on those houses bought by investors and have become rental units, and a break down by zip code.

- in the AV there are 42,000 homes that are rentals
- of the 143,000 households in the AV, 29.6% are in rented homes
- 93534, mid Lancaster, 57% of homes are rentals
- 93550, mid Palmdale, 38.1%
- 93501, Mojave, 37.7%
- 93505, California City, 30.9%
- 93560, Rosamond, 30%
- 93535, east Lancaster, 28.9%
- 93536, west Lancaster/Quartz Hill 26.9%
- 93543, Littlerock, 21.5%
- 93551, west Palmdale, 14.2%
- 93552, east Palmdale, 13.1%

If we just take the raw numbers of 42,000 rentals, which at sometime in the future will be homes that will be for sale, and the current sales pace of the MLS in the AV, GAVAR, of 600 sales per month, we come up with a supply of 5.8 years.  This does not count the homes already listed, which is somewhere around 1,400.  In addition, we cannot forget the shadow inventory, the homes that banks already own, + the homes they are in the process of foreclosing upon.  While this may seem like a huge supply of homes, not all 42,000 homes will come on the market for sale at the same time.  Some investors will elect different holding periods, either for tax reasons or for more gain as they hope the housing recovery gains even more steam in the coming years.  Some of the homes were bought as income vehicles, with the owner not really looking for capital gain as their main motivation.  Lastly, the homes that the banks actually own, are coming on the market at a trickle, again limiting supply.  If you are in the market to buy a home, besides deciding on a home, first decide on a neighborhood.  Check the crime reports in that neighborhood by looking in AV Press, our local newspaper.  The above figures aside, the 93551 and 93536 areas tend to be safer areas and have the nicer tract homes.  There will be exceptions of course.  In some areas, custom home developments can buck the overall trend of an area.   

AV Foreclosure Inventory

As of Oct 10th, lenders were holding 3,636 Palmdale homes in various stages of the foreclosure process.  This is down considerably from the Oct 2009 total of 4,560.  The one year decrease is - 20.2%.

As of October 10th, lenders were holding 3,262 Lancaster homes in various stages of the foreclosure process.  This is down considerably from Oct 2009 total of 4,140.  The one year decrease is - 21.2%. 

Comment:  If the AV foreclosure housing market continues to decline at the above pace of 20% per year, we will have 4-5 more years of this type of market, with existing homes slowly, very slowly, beginning to appreciate in value as the distress sales become a smaller and smaller portion of our market.  

Affordability
The high desert areas of the Antelope Valley and Victor Valley’s, are the state’s most affordable home markets, with 85% of all first time buyers able to buy a home.  Statewide in Q 3, first time home buyers were paying $266,620 for their entry level home.  In the AV, an entry level home costs $108,230, with a monthly payment of $570.  At the other end of the affordability scale is San Francisco, with only 51% of its resident able to buy a home.  In SF an entry level home is $500,600.  Housing analysts agree:  THE most important factor in bringing back the housing market is job growth. 

Existing Home Sales (GAVAR*)
October resales in the Antelope Valley fell slightly, down -4.4% vs September, but taking a huge fall vs Oct 2009, down -34%.  In October the average sales price was $136,734, which was up +6.1% year over year.  However, the average sales price through the first 10 months of 2010 is $145,402, up 10.5% vs the same period in 2009. 
*GAVAR = Greater Antelope Valley Association of Realtors, our local real estate board and MLS

Building Permits (Lancaster & Palmdale)
Versus 2009, new building had a strong beginning, but after 10 months, is only 3.1% ahead of last year.  Lancaster is 10.7% ahead of last year, while Palmdale is lagging at -36% vs last year.  In raw numbers, Lancaster has seen 258 permits pulled through the first ten months, vs Palmdale’s 137.  In the unincorporated areas of the AV, 99 permits have been pulled.  

Antelope Valley New Home News

Antelope Valley Tract Builder’s Sales

1990-  total of all new homes sold- 4,900 +
1999-  total of all new homes sold-    694  (The Siracusa Co.)
2002-  total of all new homes sold- 1,162 (Hanley Housing Report)
2003 - total of all new homes sold- 1,820 (Hanley Housing Report)
2004 - total of all new homes sold- 2,730 (The Siracusa Co.)
2005 - total of all new homes sold- 4,510 (The Siracusa Co.)  
2006 - total of all new homes sold- 2,584 (Hanley Housing Report)
2007 - total of all new homes sold- 1,720 (Hanley Housing Report)
2008 - total of all new homes sold-    906 (The Siracusa Co.)
2009 - total of all new homes sold-    669 (The Siracusa Co.)  20 year low

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Antelope Valley Aerospace & Defense

Nov 9- The Spaceship Company (TSC), a joint venture between Mojave Based Scaled Composites and Richard Branson’s Virgin Group, break ground on a new manufacturing plant at Mojave Air & Space Port for spaceships. Company officials and two Congressmen attended the ground breaking.  The new facility will be 62,000 square feet in size.  The new manufacturing site is being named “FAITH” for Final Assembly Integration and Test Hanger.  Presently, Scaled Composites and Virgin Galactic employ a total of 25, but that number is expected to grow to 125-150 in the early stages of the completion of FAITH.  TSC already has orders for 5 SpaceShipOne aircraft and two mother ships, the WhiteKnightTwo, from Virgin Galactic.  In total, Virgin and TSC have invested almost $300M in the Mojave region.

Nov 18- The AV Board of Trade is lobbying to keep the unmanned Global Hawk aircraft program fully funded. The Global Hawk undergoes final assembly at Plant 42 by Northrop Grumman.  The program, besides being an effective weapon against terrorism, also provides 644 jobs and an economic impact of $52M to the AV area.  AVBOT has sent letters to Senators Feinstein and Boxer and to Congressman Buck McKeon, who represents the AV.  Besides asking for political support for the program (funding), the letter also says that reducing funding will hamper ongoing enhancements to the aircraft’s capabilities and delay its production of new units.  In the approaching era of scrutinizing govt spending, the aircraft’s rising cost has drawn its critics.  NG attributes the rising cost of the Global Hawk to adding more surveillance sensors, buying the planes in small batches, and the higher than projected use over Afghanistan and Iraq.  Nationwide, the aircraft has 250 contractors that contribute to the Global Hawk; in California alone, that number is 10.  The Global Hawk will be funded, with the only thing that remains to be decided, the level of funding.

Nov 29- The X-34, a reusable unmanned launch vehicle technology demonstrator, developed by NASA in the late 1990’s, but canceled in 2001, has been sent over to the Mojave Air & Space Port to evaluate its condition to return to flight.  Since 2001, the X-34 has been sitting in a warehouse at Edwards Air Force Base.  At nearly 59 feet long, the aircraft was suppose to be 90% cheaper at getting objects delivered into space.  The X-34 was designed to fly at speeds of 8 X the  speed of sound, reach altitudes of 50 miles, and land on a runway like a plane.  The X-34 has never been in “free flight”, either under power or by gliding.  It will take a month or so to evaluate the X-34’s overall condition.

Dec 3- The unmanned X-37B, built by Boeing at Plant 42 in Palmdale, and the apparent successor to the space shuttle, lands safely at Vandenberg Air Force Base after a 7 month mission in outer space.  The mission was classified and top secret so no details of it are available.  The Air Force’s 30th Space Wing, Rapid Capabilities Office, and Boeing, collectively, ran the mission.  The unmanned, robotic space plane returned from what officials called a “test flight”.  For 7 months?   The X-37B looks like a scaled down space shuttle, but without windows.  The secretive nature of the mission had several speculating that it may have carried some type of spying-surveillance system in its payload.  The Air Force took over the X-37B in 2007, which had begun in the early 2000’s as a NASA project.  The aircraft is 9.5 feet tall, 29 feet long, has a wingspan of 15 feet, and weighs 11,000 pounds.  Due to its smaller size, the X-37B’s turnaround time from landing, to being able to go up on its next mission, is about 10-15 days, much faster than the Space Shuttle.  The budget for the plane is also top secret, as will be the budget for the second aircraft.  One obvious use for the X-37B would be to get smaller multiple satellites up and placed rapidly.   
            
Solar & Wind Energy News

Nov 3- The Pacific Wind Farm, located 3,700 acres west and NW from Mojave, on the east slope of the Tehachapi Mountains, is being hailed as an economic stimulus for Kern County.  EnXco, the developer of the wind farm, says the 140 megawatt wind farm will have $324M economic impact on the area.  In the short run, 1,000 temporary construction jobs will be created.  The project, during its development and construction, will generate $159M and another $8M per year over its 20 year lifetime.  An economic study indicates, that throughout Kern County, benefits will be seen such as new jobs, and a rise of income tax and revenues because of development, construction, and long term operations and maintenance.  The construction phase, which is expected to last 6-9 months, is forecasted to generate $44M in local wages.  Over the 20 year period of operation, the wind farm will create $165M in total revenue, support 60 full time jobs with a payroll of $5M.  Property tax revenues are expected to rise by $4M.  San Diego Gas & Electric has an agreement with EnXco to purchase the electricity generated by the wind farm.

Nov 8- The CEO of New York based, the Beautiful Earth Group, formed in 2008, speaks to the Quartz Hill Chamber of Commerce.  The BEG has a 180 acre, $170M solar project on the drawing board at 90th St West & Ave H.  The 19 megawatt solar facility will generate enough electricity for 9,200 homes.  Once approved by the City of Lancaster, the project will take one year to build and create 150 construction jobs.  Once completed the facility will only require 6 full time workers.  BEG CEO and President said, “We think the AV is perfect for solar.  The AV has great solar radiation; its among the best in America.  Flat land is what solar developers want and the AV has a lot of flat land.”  The Beautiful Earth Group has offices in Newport Beach and Japan. In mid Nov  The Lancaster City Planning Comm. gave their approval for the above solar farm at 90th St West and Ave H, a former subdivision for 631 homes that was graded before being abandoned by the developer.  The residential project was abandoned by the Heller Development Co. when the housing market turned down.  The Beautiful Earth Group acquired the parcel during the foreclosure process.  This will give Lancaster two solar facilities in this general area, with the other being located at 100th West, between Avenues H and I-8.  Both Solar facilities will be relatively near an existing Southern Cal Edison substation (90W & H). 

Nov 9- Sempra Generation has received approval by Kern County for their 120 megawatt, 960 acre solar facility west of Rosamond.  Northrop Grumman, the aerospace giant, tried to block the facilities location, arguing that it would interfere with one of their radar testing facilities.  NG also argued that the environmental impact report was incomplete in some areas.  NG test radar testing area is 1,400 acres, 8 miles north of the Sempra site, in the Tehachapi Mountains.  NG uses the site to test aircraft for “stealthiness” and has been there for 30 years.  NG is also appealing the solar plant at 170th West & Ave D by AV Solar Ranch.  The Pentagon was not alarmed by the solar plants which was a factor in the Kern County decision.  The location of the Sempra site is 135th West to 150th West, Holiday and Kingbird Avenues.  Sempra was seeking the rezoning of all of the acreage for the project to agriculture. Presently, the 960 acre area has different zonings of residential, industrial, and commercial.  Sempra Generation is owned by Southern California Gas Co.

Nov 23- Losing their second appeal in two weeks to block a major solar project, Northrop Grumman had raised concerns again over their radar testing in the area.  The argument of “we were here first” did not help either, as LA County Supervisors gave their approval of the solar project at  the streets of 170th West & Ave D.  Before deciding, supervisors tried to get the Dept of Defense to weigh in on the issue, but they declined, calling the issue “a private matter of land-use.”  The Dept of Defense’s decision not to interfere sealed the fate of NG argument.  AV Solar Ranch One will be a 230 megawatt solar farm and sell their electricity into the state’s grid system.  The construction of this solar farm will include a new transmission line 3.5 miles north along 170th  St West to an Edison sub-station which has yet to be built.  
   
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Antelope Valley News

Nov 4- Scott Cummings, manager of the AV Mall in west Palmdale, says that since Macy’s arrival in September, sales for all mall tenants have gone up 2%-3%.  Cummings also reports that interest in the mall’s vacant space has also increased, saying he has showed the empty Harris Dept store space 3 times since the arrival of Macy’s.  Shoe maker, Skechers, will open a store in the mall before Thanksgiving.  The restaurant, Yard House, known as an upscale eatery and for its wide selection of draft beer and classic rock music, will open next year in the spot vacated by the Cinemark theater chain.  Cinemark is now located on the NW rim of the mall.  In closing, Cummings said that Forest City, the mall owner, is committed to staying in Palmdale, noting that they have a 4 year plan to replace all of the air conditioners, with 9 having been replaced this year.   

Nov 5- Here is demographic data on the Antelope Valley from a report compiled annually by the AV Economic Alliance.
- average annual income in the LA County portion of the AV, $71,042
- average annual income in the Kern County portion of the AV, $67,054
- average household income in Palmdale, $74,379
- average household income in Lancaster, $66,840
- 52% of AV households are in the $50,000 to $150,000 income bracket
- the AV has a workforce of 225,000, of which 32,000 are unemployed
- Valley wide, the jobless rate is 14%
- 68% of the homes in the AV are owner occupied, vs 49% throughout LA County
- 27,000 AV residents are attending college
- 18% of AV residents hold a bachelor’s degree or an advanced degree
- 80% of the AV residents live in the LA County portion
- 71,000 workers commute daily to work “down below”, some driving 2 hours or more round trip
- AV high schools have a 78% graduation rate

Nov 9- Antelope Valley Chevrolet, owned by long time auto dealer Lou Gonzales, opens for business in the Lancaster Auto Mall.  Located on 5 acres, the dealership has a 29,000 sq ft showroom and can display 250 new cars and 100 used cars.  The dealership opened with used cars and got their new cars within a day or two of opening.  Gonzales was able to bring over all of his 38 employees from his former Saturn dealership in Palmdale.  In addition, two more workers have been hired and the dealership is looking to add technicians, salesmen, and clerical help.  When asked about his own investment dollars in the new dealership, Gonzales replied, “Millions, that’s plural.”  The City of Lancaster is paying the dealership $604,000 over a period of years as an incentive to locate in the auto mall.

Nov 12- The City of Lancaster takes an action to make it easier for homeowners on acreage to install wind powered electric generators- windmills.   The usual requirement for a conditional use permit fee (CUP) is being waived (a $8,200 fee) to just $350 for a review.  The City will allow the electric producing windmills on non-commercial parcels, from 1 acre up.  The review process would take 15 to 20 days.  If a turbine is located within 300 feet of an existing home, that homeowner will be invited to speak in opposition.  Besides the visual effect of a turbine, there is also the factor of the noise it produces as it turns.  Turbine blades must be limited to just under 12 feet long.  Turbines on lots larger than 5 acres will be allowed to reach a height of 80 feet tall.  On 1 to 5 acre parcels, turbine height is limited to 65 feet tall.  Lancaster City officials of the changes said, “We feel this is a reasonable approach to encourage the use of alternative energy within our city.”     

Nov 15- The Lancaster Planning Commission gave their unanimous approval to changes required of builders to the homes & commercial buildings they build.  The changes will make the homes look less like production homes and improve the quality of developments.  Some of the changes would make homes slightly more expensive, but will be well worth the extra cost.  Home designs would create more shade, making them more energy efficient as well.  These include new construction or remodeling.  Here is a quick summary of the new requirements.

- design and sides and backs of buildings to be consistent with the design of the front.  No more flat blank walls as the use of insets, canopies, trellis features, colonnades, and other features would be required.
-  tract homes will require at least 6 complementary styles of homes for each new neighborhood and 2 different  color schemes for each style of home.
-  the use of front porches, shaded walkways, landscaped parkways, and varying yard layouts, patios, garages,  and other features, while limiting garages to less than 50% of the front façade.
-  use of consistent building materials and landscaping throughout a project to promote community identity.
-  sidewalks installed 4-6 feet away from the street to create parkways for trees to provide shade and a traffic buffer for pedestrians.
-  use of open spaces that connect residential areas and commercial areas via pedestrian friendly paths.
-  for commercial, use water features, monuments, public art, or landscaped areas as focal points
-  also for commercial, vary store and shop entrances, vary the planes of walls in depth and direction; vary roof lines and add towers or other features to avoid the blank flat wall look of big box stores.  
-  requires that site plan and vicinity map be submitted that would show the building elevations, drawn  to scale and reflecting the buildings dimensions accurately. 
-  an approved site plan shall be permanently maintained as approved

Nov 19- During the week ending on this date, the Lancaster Planning Commission took the following actions:

- voted approval of a drive-thru car wash to be added to the AM-PM mini-mart at 60th West & Ave L-8
- granted approval for a 49 acre, 45 lot industrial subdivision west of Sierra Hwy and south of Ave L. The developer is Carlo Bondanelli who will build the project in 3 phases, 10 lots, 6 lots, and 29 lots.  Lot sizes  will range from 21,816 to 51,960 sq feet.
- granted Clock Plaza Storage a 3rd and final 1 year extension to begin / complete their storage facility along  the west side of 20th St West, north of Ave K.  If built, the facility will provide 118,104 sq feet of storage.

Nov 23- The City of Lancaster holds a “commemoration” and reopens all of Lancaster Blvd, which since March, had undergone a complete $9.5M makeover.  The downtown area, from Sierra Hwy, west to 10th St West, has gone through a complete face lift, with the Blvd being remade in the image of La Rambla, a tree lined street in Barcelona, Spain that is a major tourist attraction.  Now known as the BLVD, 4 lanes of traffic have been reduced to 2, a median in the middle of the street has been built with park benches, trees, and lights.  Along the curbs, diagonal parking has been instituted.  Other nuances include: resurfacing of the two lanes of traffic, new curbs, sidewalks, storm drains, landscaping, furniture, decorative lights, and a sound system.  In addition, the BLVD now has a 15 mph speed limit, allowing drivers to gawk a bit, and making it safer for pedestrians.  The BLVD will hosting a holiday event called the Holiday Stroll which begins on Dec 3rd and runs  12 days which will include a schedule of holiday events.  One of the projects still under construction, is a 160 seat movie theater at the SWC of Fig Ave and Lancaster Blvd.  Besides the theater, the building will have a café on the first floor, a two story book store, and office space on the third floor.  The overall goal of the project is to revitalize the BLVD and to attract young working professionals, and those with disposable income, to the area for shopping, cuisine, art galleries, and music.   

Nov 24- The City of Palmdale, after a successful launch in Feb 2009, reinstitutes its stimulus program for new auto purchases within the City.  New cars buyers will get a $300 gift card to the AV Mall, with new motorcycle buyers (of at least $5,000) getting a $100 gift card.  The City says that the Feb 2009 program generated $18M in economic activity.  The gift cards are limited to one per household.  Dealerships located in the Palmdale Auto Mall include:  Buick, GMC, Cadillac, Hyundai, KIA, Honda, Nissan, Saturn, and Volkswagen.  

Nov 30 - The City of Palmdale gives their approval of the sale of 2 + acres next to the Palmdale Regional Medical Center.  The buyer is Toneman Development Corp., a commercial and industrial builder and developer.  The reported purchase price is $546,000 which comes out to $6.26 per sq foot (based on 2 acres).  The parcel will have two buildings, one at 10,210 sq feet and the other at 5,600 sq ft.  While plans for each building are not in concrete, medical office space and a drive through pharmacy are seen as the probable uses.  Comment:  In 2007, Toneman bought one of my listings, a 4.54 acre, light industrial piece, at 6th St West, on Ave L.  Toneman then built 3 buildings totaling 56,420 sq feet, using some of the space as his own HQ/office.  Toneman did a beautiful job on the property as it is very attractive.  The address is 620 W. Ave L.  Toneman has been in this location since mid 2009.      
            
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Antelope Valley Land Market

"Supply and demand, in the end, determines the value of all things." 
     - Adam Smith, "Wealth of Nations" 18th century Scottish economist

Supply closed out Nov at 1,682, up just 5 listings, for a fractional move of less than 1 % from last month, October. As a longer term forecast I made back in the fall of 2005, when volume made its first big break to the downside, I said that supply would fall to the 1,500 area before the Bear market was over.  At that time I had no idea that foreclosures would skyrocket to record levels, that Obama would be elected President, and that his programs to “save” homeowners would put the national housing market in “quick sand”.  When one is stuck in quick sand, the more one struggles, the worse it gets, and so it goes with the federal govt- the more they have tried to circumvent the market, the only real market clearing device, the worse the situation has gotten.  Two years from now, we will be waiting for a new Congress and President to take office in January 2013.  Probabilities are very high that the housing market at that time will still be a mess.  It could be slightly better, but by no means do I expect it to be healthy or “normal”.  It is the present market environment that land sellers will have to contend with between now and then.  Sellers will have to give-in and price correctly, or take the property off the market, waiting for better days.  It will be a long wait.  It now appears that we have the fundamental backdrop to fall to the 1,000 area on supply before this Bear market ends.  The road to 1,000 to 1,500 will be paved by sellers capitulating and pricing their property to sell, regardless of its purchase price, or by taking their property off the market.  It will be a long slow ride down, but we should work our way lower, towards 1,000, over time.
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Supply numbers in perspective:
Supply change vs. last month:   no change            
Supply change during 2010:      no change     
Supply change year over year:     + .5%
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Supply at end of Nov 2010: 1,682
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Supply at the end of 2009:  1,673
Supply at the end of 2008:  2,100
Supply at the end of 2007:  3,134
Supply at the end of 2006:  3,263 (market peak in prices)     
Supply at the end of 2005:  2,264 (market peak in sales volume)       
Supply at the end of 2004:  1,902
Supply at the end of 2003:  1,607
Supply at the end of 2002:  1,770
Supply at the end of 2001:  1,665
Supply at the end of 2000:  1,800
Supply  in  May  of  1989:      587 (market peak in price)
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Demand- Nov demand (28) was unchanged from the prior month, October.  November was just another Bear market month in the AV land market.  While it is a confirmed “buyer market”, it is by no means an easy market in which to get intelligently invested.  The hallmarks of our current market are:  falling supply, low quality of supply, and with most sellers having yet to check their calendars - it is not 2006 anymore. In the 11 months of 2010 thus far, 9 of those months saw sales within the range of 25 to 35 sales, which is typical Bear market sales volume.  I am often asked, “When will the land market get better?”  Do not think in terms of time; watch the housing market, when it gets healthier, land too will eventually start to improve.  When the MLS has more houses listed than the local banks and lenders own, that would also be a good start.  For now, as we wait for the occasional good deal to come along, patience is key.  As we approach the capitulation stage of the market cycle, a great buying opportunity is coming our way, but again, patience is important, in both choosing location and the price to pay. 
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Land- Median Listed Prices

Median price this month =  $42,000
Median price one yr ago =  $49,000
Median price change, year over year:  - 14.2%       

Land- Average Days on the Market398

Demand numbers in perspective:   
Land sales year to  date-------- 344  (thru this month)
Land sales forecast 2010------- 372  (projected)
Land sales in all of 2009--------325                                                                             
Land sales in all of 2008------- 475
Land sales in all of 2007------ 1,637              
Land sales in all of 2006------ 2,648 
Land sales in all of 2005------ 3,376
Land sales in all of 2004------ 2,372   
Land sales in all of 2003------ 1,240
Land sales in all of 2002------   679
Land sales in all of 2001-------  407
Land sales in all of 2000-------  307
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As you can see from the average monthly sales below, on a projected basis, we are back to 2000-2001 sales numbers, which were at the tail end of the last Bear market, and 2 years before the 2002-2006 Bull market began.                      

Average land sales (in 2010) per month-  31
Average land sales (in 2009) per month-  27
Average land sales (in 2008) per month-  40
Average land sales (in 2007) per month- 129
Average land sales (in 2006) per month- 221
Average land sales (in 2005) per month- 281
Average land sales (in 2004) per month- 198
Average land sales (in 2003) per month- 103
Average land sales (in 2002) per month-  56 
Average land sales (in 2001) per month-  34
Average land sales (in 2000) per month-  26

 


- Frank Donato, Fourth Quarter 2010

Information presented above has been compiled from reputable sources, and is deemed reliable but not guaranteed. All opinions expressed are those of the Author.