San Diego Business Journal

Market Trends Bring Housing Developments

REAL ESTATE: Developer Moves Ahead With Projects By Lou Hirsh Monday, January 21, 2013
Locally based Corky McMillin Cos. expects to break ground by mid-year on the long-discussed Millenia mixed-use development in Chula Vista.

Locally based Corky McMillin Cos. expects to break ground by mid-year on the long-discussed Millenia mixed-use development in Chula Vista.

While it is not low-income housing, Galarneau said the single-family homes at Quarry Creek are slated to be built in a higher-density setting than might otherwise be found in a rural setting. Plans incorporate walkable spaces, bike paths and close proximity to public transit options, in order to reduce vehicle trips.

“We think this is an example of the kind of smart development that we have done previously, and that also fits well with what Carlsbad is looking for,” Galarneau said.

McMillin is among several developers with residential developments now under way, primarily in relatively undeveloped areas of North and South County. The uptick follows a nearly five-year period in which few major single-family projects broke ground locally.

Catch-Up Phase

However, experts note that the region retains several elements that have traditionally kept local housing development from keeping up with rising demand during periods of economic recovery.

Alan Nevin, principal in the San Diego consulting firm The London Group, said the local single-family housing supply began a catch-up phase in 2012, which will likely continue in 2013 and possibly the next two years.

Like Orange County, he said the San Diego region has a climate marked by limited land availability, relatively long entitlement processes and high builder fees, and a financing climate weighed more in favor of apartment development than the financing of single-family lot acquisitions. After lots are acquired, the process of entitling and building single-family homes can span two or three years.

“The past year was a very good year for new housing here,” Nevin said. “The problem is that we do not have a sufficient number of lots ready and available to meet what the demand is calling for.”

One result already emerging, he said, is a return to trends of nearly a decade ago, when rising land and home prices spurred North County residents to look toward Southwest Riverside County for more affordable properties. While there is little room left for new construction in that region, Nevin said resale properties there could see sales rise in coming months among buyers who work in North County and don’t mind commuting daily from the nearby region.

Galarneau noted that McMillin also remains active in regions such as Riverside County, where it continues to work with partner home builders on projects including its 700-acre, master-planned Summerly development in Lake Elsinore.

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