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Homebuilders Predicting Increased Prices, Fees, Costs

Homebuilders Predicting Increased Prices, Fees, Costs

Real Estate: Legislation Seen as Hindering Development

BY MANDY JACKSON

Staff Writer

Home sales boomed in 2002, but the momentum may slow this year as housing prices continue to increase.

According to Multiple Listing Service statistics compiled by the San Diego Association of Realtors, the median price of homes sold in San Diego County was $339,000 at the end of November, up 21 percent from $267,800 a year earlier.

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“The best thing that happened all year for first-time homebuyers is the availability and low cost of money,” said Cheryl Betyar, a realtor in One Source Realty GMAC’s Rancho Bernardo office and president of the San Diego Association of Realtors.

Low interest rates offset double-digit housing price increases and gave lenders the ability to offer creative mortgage packages, Betyar said.

According to national housing lender Freddie Mac, interest rates fell to 5.93 percent for a 30-year fixed-rate mortgage during the last week of December , the lowest rate since 1965.

“We can’t sustain these rates. We will see them go up (in 2003), but I don’t think they’ll go up to levels that will hurt us,” said Kent Aden, executive vice president of The Otay Ranch Co., which is developing homes on 6,000 acres in the master-planned community of Otay Ranch in Chula Vista.

Aden is also the 2003 president of the San Diego County Building Industry Association.

In 2003, the time a home spends on the market will likely increase to a normal cycle, selling in one to two months instead of one to two weeks, Betyar said.

“We will still see appreciation, but not as strong as last year,” Betyar said.

Concerns Still Housing, Traffic

Out of the 37 real estate and construction professionals who responded to the 13th annual San Diego Business Journal/Deloitte & Touche Economic Outlook Survey, 20 said a lack of affordable housing is San Diego County’s biggest problem. Another 10 said traffic congestion is the biggest hurdle.

In 2003, members of the building industry plan to continue fighting regulations they say add to the cost of housing in San Diego County.

On Aug. 6, the San Diego City Council approved an inclusionary housing policy, which requires developers to set aside 10 percent of the homes in their new developments for low- and moderate-income housing. They can pay a fee to opt out.

The BIA opposes inclusionary housing, saying the cost of providing the affordable homes or paying the opt-out fee will be passed on to homebuyers.

Paul Tryon, executive vice president of the BIA, said, “It was a positive year in the sense that housing emerged as an issue that has to be dealt with.”

The BIA is in the midst of a lawsuit it filed in December 2001 against the San Diego Regional Water Quality Control Board regarding the board’s new stormwater permit rules. The case is scheduled to go to trial Feb. 10.

The cities of Santee and San Marcos, along with the San Diego Fire Districts Association, the Construction Industry Coalition, the California Business Properties Association and the Building Industry Legal Defense Fund are part of the lawsuit with the BIA.

According to BIA estimates, the new stormwater requirements will add $8,000 to $20,000 to the price of new homes. The cost would cover the expense of building new technology into new homes that would clean stormwater to meet the new quality standards before it runs into storm drains.

It is expected to cost $1.5 million for the city of San Diego and $3.7 million annually for the county to comply.

Focusing On Density

In 2003, the BIA will continue to work with the city of San Diego and with the county on their general plans to make sure they include enough land for new housing, according to Matt Adams, the BIA’s director of governmental affairs.

Local and county general plans need to be updated to include the kind of densities that accommodate condominiums, Adams said. Instead the trend has been to downsize land to less density.

“There’s not a lot of 10- to 20-unit per acre land,” Adams said.

SB 800, a state bill regarding construction defect claims, passed the Legislature in 2002. Aden expects more developers to get into condo construction and new developers specializing in high-density, mixed-use projects will emerge.

SB 800 sets guidelines for how new homes should be built and perform, and sets timelines for builders to respond to homeowners’ complaints. Builders hope the reform will cut down on construction defect lawsuits.

In 2003, the BIA will keep an eye on fees cities charge to cover costs of public facilities.

In central San Diego’s Uptown district, impact fees are scheduled to increase from $800 to $7,665 per housing unit. The fees pay for transportation improvements, parks, libraries and fire services.

“We forecast increasing costs, fees and bureaucratic battles,” Tryon said. “There will be more and more government intrusion into our industry. We will spend more time fighting this year.”

He said 2003 will probably mirror 2002 in terms of new construction. Last year 13,500 permits were issued for new homes. The county needs 25,000 houses built per year to keep up with demand, he said.

“We’re concerned because we continue to build a product that is out of reach for more and more people,” Tryon said.

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