Lower Interest Rates May Help Industry Stay Afloat
After the dot-com collapse, a bear market for stocks and the Sept. 11 terrorist attacks, all economic signs now are pointing to a housing construction slowdown.
However, local residential homebuilders are optimistic about their future and expect a rebound from 2001’s turbulent economy.
The San Diego Business Journal’s List of Residential Homebuilders ranks local homebuilders by the number of homes closed in 2000. The 14 homebuilders on The List reported 4,205 homes sold in 2000, a decrease of 8.9 percent from the previous year.
“Who knows what would of happened without the (World Trade Center) bombing?” said Michael Crews, president of Michael Crews Development, No. 14 on The List. “Things were slowed in the months of September and October, but our company has picked up as the economy continues to turn.”
Escondido-based Michael Crews reported 52 homes sold in 2000 for an average selling price of $404,710. The company specializes on homes from $400,000 to $1.3 million on large lots in North County.
The company was also ranked nationally by Builder Magazine as one of the nation’s fastest-growing builders in its September issue. It was ranked No. 58 in September 2000 and now ranked No. 27, according to the magazine.
The growth was attributed to the company’s management with its contractors and quality control on its homes.
The same contractors are used on most of its home development projects, according to Crews.
– Unique Concepts For Contractors, Quality
In addition, the contractors are treated well by providing them with gifts and paying them every two weeks for work on the projects. He said bi-weekly payments are quite unusual in the building industry.
“Every hand that touches our homes must do so with responsibility and care,” Crews said.
For quality control, the company has a program called “Crews Control.” It allows Michael Crews himself to inspect the houses during different phases of construction to meet its high-quality standards.
Some of the current projects include Sky Ridge in Valley Center, High Grove Estates in Escondido and Harvest View in Fallbrook.
Despite the growth in the housing market, land and housing prices continue to climb for San Diego County.
According to the San Diego Regional Chamber of Commerce, the average price for an existing single-family home rose to $315,000 and is expected to increase to $347,400 in its forecast in 2001. The Meyers Group, a real estate research company in Irvine, reported the average single-family sales price for San Diego is $387,630 in October.
The average price for homebuilders on The List was $365,401 in 2000.
“The prices for land and fees continue to escalate which makes it very difficult to offer lower priced housing where we have the greatest demand,” said Bryan Binney, vice president of construction of Shea Homes, LP, No. 1 on The List. “The industry continues to look at alternatives to land planning and increasing density in areas where it makes sense.”
– A Good Time To Buy
Binney predicts there will be more redevelopment of Downtown San Diego with high-rise construction.
Shea Homes sold 759 homes in 2000, a decrease of 3 percent from its previous year. The average selling price in 2000 was $360,000.
The company has home development communities in inland North County, East County and South County. Its largest development is the 220 homes in the Scripps Highland development.
Binney said Shea Homes in San Diego has not experienced much difficulty in the housing market.
“The San Diego area continues to be under-supplied, most specifically in the entry-level market,” Binney said.
He said the continued lowering of interest rates by the Federal Reserve has dropped mortgage rates, which made it fantastic time to buy a home.
The Federal Reserve has cut interest rates 10 times this year. Currently, the mortgage rates averaged 6.51 percent ending Nov. 16, according to a survey by McLean, Va.-based Freddie Mac.
“By now, everyone has heard the mortgage rates are the lowest they have been in decades,” he said.
