HOUSING BOOM LEAVES DEVELOPERS SCRAMBLING

New homes can’t be built fast enough after operations scaled back during recession

By Jonathan Horn12:01 A.M.NOV. 14, 2013

The rapidly recovering housing market has led to a new issue for new-home developers: the inability to get their products to market quickly enough, said a Pardee Homes executive Wednesday.

Beth Fischer, division president for Pardee’s San Diego office, said mass layoffs and scaled-back infrastructure projects during The Great Recession are now making it difficult to build homes fast enough. During the downturn, Pardee laid off 75 percent of its local staff to respond to a loss of 80 percent of its business.

Earlier this year, as people came off the sidelines to capitalize on still-low prices, new-home developers didn’t have as much inventory to offer.

“All that conserving of cash and cutting costs meant little extra in the way of infrastructure in the ground, permits in process and projects and entitlements,” Fischer said at the Women in Real Estate conference at the University of San Diego. “Builders not holding land felt the heat in competitive lot purchase bids, and there were few lots in ready-to-go condition.”

Fischer said San Diego is projected to add about 15,000 households per year in the next three years, but that building permits only reflect about two-thirds of that demand to be satisfied. She noted obstacles to getting projects done quickly in San Diego County, including the area’s topography and environmental regulations. That’s going to keep supply low.

“Everyone wants to have purchased at the bottom of the market, so when prices show that first tick up, waiting buyers jump off the fence and they do so in droves,” she said.

Median home prices were $412,750 in October, up 17.9 percent from October 2013, DataQuick reported this week. Fischer said she expects prices to continue to rise, but not as quickly as the 24 percent they were up year-over-year earlier this summer. Fischer said, however, that because of the limited supply, the housing prices will rise faster than area incomes, noting what’s commonly referred to in San Diego as the “sunshine tax.”

“Since San Diego’s communities won’t suddenly decide to embrace new housing, affordability will definitely suffer,” Fischer said.

Fischer said new construction is focused on creating walkable, bikeable neighborhoods, with centralized services, gathering spaces and proximity to good schools. She said integrating the homes with technology, such as remotely turning on lights and music, adjusting temperatures, and locking and unlocking doors will render older homes uncompetitive. And when the economy improves, people want more environmentally friendly designs.

The conference, hosted by the USD Burnham-Moores Center for Real Estate, also included a speech from Kris Michell, president of the Downtown San Diego Partnership, who spoke on the merits of continuing to develop the downtown area. Later, the audience of about 140 people was able to ask Michell and Fischer questions during a panel discussion.

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