By Tom Pasqua
(page 1 of 2)San Diegans are buying new houses again. And while the generally upbeat salespeople who staff the new-home projects rarely voice doom about sales, they do seem genuinely pleased by the sales figures in their respective developments.
The statistical pickup was a 4 percent improvement in 1996 over 1995, notes Russ Vallone, president of Market Profiles, whose company charts such matters. "That means you can’t expect to get 10 to 20 percent off on a new house," he says. The local market in resales picked up this past year as well—from 22,000 to 25,000—because "we’re growing again. We’re generating jobs."
The surge is more than economic. Vallone sees an improvement in perception— how people feel, largely fueled by the media. He thinks news in general is better. "One of the things we’re very excited about is the increase in the move-up market of $300,000 and up—a 50 percent increase—from sales of 600 houses in both 1994 and 1995 to 900 in 1996." To Vallone, this growth reflects positive attitudes: "You have to feel confident to step up."
Whether in the sales office or corporate headquarters, the view is the same. Jim Davis, sales manager at Brehm Construction, sees an up trend continuing in 1997. Sales of high-end as well as low-priced homes are up; he sees increases in homes priced at $250,000 and above.
For perspective, Sharon Hanley, who publishes the "San Diego Traffic Monitor" real-estate newsletter, recalls that in 1988 local builders sold 14,000 attached and detached housing units. That total was down to 5,700 in 1993, climbed to 6,500 in 1994, slid back to 5,700 in 1995 and eased back up to 6,300 last year.
In the Kaufman & Broad sales office, Fran Finn, who sells homes at Eaglewood at EastLake Greens, is seeing the same upward tendency. "The market is much better than one year ago, on the low scale through the higher stuff," she says. Finn is selling to some first-time homebuyers in the $160,000 to $180,000 range, but she compares notes with her husband, who sells more expensive houses, and they both feel 1997 is moving very well.
The movement is so strong that some sellers are even buying their own products. Mary-Ellen Robinson at Pardee’s Vintage at Palacio Del Mar is excited about moving into her new home in the phase-seven development of the units she sells. Robinson has been working in the business for 23 years, and this is the first time she has bought one of her own offerings.
The eagerness has a downside, Brehm salesman Tom Hogan at EastLake Greens’ Augusta Place points out. Augusta Place offers upscale lots and homes, built to buyer specifications at EastLake Country Club. That’s a problem, he says, because by the time would-be buyers visit and revisit the many plans and options available, they don’t want to wait the necessary months for completion. Buyers, Hogan says, want their new houses almost immediately.
From a business standpoint, the building industry also wants to get people into their own homes as soon as possible, seeing home equity as a leverage to a larger house in the future—and additional sales. And first-time homebuyers, especially, are eager to begin building that equity and to reap the tax benefits of home ownership.
"Ninety-nine percent of our buyers are younger people in their 30s with kids," says Marilyn Anderson, a sales representative for Pardee at the Monterey tract in Poway. "Today [a Friday], I’ve probably had eight people [looking], and I have been averaging 80 to 100 people a week." These people visit in predictable patterns. "Usually they come on the weekends for the first visit. It takes two to four visits to make a decision."
Rochelle Manson, a realtor with ERA, The Property Store in Scripps Ranch who deals in resales, is convinced the market has bottomed out and prices are beginning to climb again. She’s not sure why. "It’s a mystery to all of us." She does know inventory is down: There are not enough homes for would-be buyers. And interest rates have stayed down. Manson likes selling resale homes because the buyer has the chance to check out the built-out neighborhood and existing neighbors.
People looking to buy new housing often intend to move up from condos. "Attached housing is virtually drying up as a result of construction-defect litigation," says Vallone, whose organization surveys the new developments and reports quarterly on their sales progress. That depletion in the new-condominium market was predicted by San Diego Magazine’s panel of experts in April 1995 ("The Lowdown on the American Dream"). However, says the Traffic Monitor’s Hanley, condominiums represent 22 percent of the total market share.
Whatever the choice of residence, investment profit shouldn’t be the determining motive, according to Hanley. "My personal feeling is everyone should buy a home," she says. "That is a stable, consistent environment. I don’t think people should do it for expected appreciation."