The building process takes time
Frequent talk of a Bay Area housing shortage often skims over the nuances of all that builders have been doing over the years to create more homeownership opportunities.
“It’s a long road even to get a new-home community started,” said Marc Burnstein, vice president of sales and marketing for Walnut Creek-based Davidon Homes, which soon begins vertical construction on its 99-home Woodbury Highlands community in Lafayette.
Davidon’s multifamily Woodbury Highlands neighborhood will feature 99 homes throughout 16 buildings in four distinct groups of plans. The plans range from traditional townhomestyle living to larger, luxury condominiums. The community also will include 15 homes to be sold at below-market (affordable) pricing to qualified buyers.
“It can take twoand-a-half years for a community to be ready for sales,” said Burnstein. “And that’s if there are no zoning issues or delays from within the local area itself.”
The Building Industry Association of the Bay Area, for instance, describes the Bay Area as “a region made up of more than 100 local governments and multiple layers of regulatory and planning bodies.” At the local, regional and state level, the nonprofit membership association navigates those layers of regulation to advocate for an adequate supply of quality homes for people of all income levels.
The building process, Burnstein added, begins with research and identification of land followed by intense competition to purchase that land. Then, after working through the requirements of various public and private agencies and entities, often including requests to perform environmental impact
reports, a builder can reach the mapping stage.
“Builders plan several years in advance,” he said. He also added that one way that builders address new housing needs for people at all stages of life is by offering a mix of products in the regions where they build.
The Davidon Homes community of Park Ridge in Antioch, for instance, caters generously to a demographic of first-time homebuyers who can take great advantage of today’s low interest rates.
Another builder, San Francisco- and Irvinebased City Ventures, also serves this group of Bay Area buyers.
“Interest-rate drops create affordability,” said Phil Kerr, CEO of Homebuilding for City Ventures. He added that, because of low interest rates, new homes at all price points are more “buyable” now than ever.
By considering newhome ownership as an
alternative to renting, buyers can pay less per month toward principal and interest than they have been paying for rent on comparable homes, Kerr said.
Low interest rates, paired with the contemporary energy-efficient, smart-building practices of new-home construction, present opportunities for buyers who previously could not have considered buying a home in the $600,000 to $700,000 range.
For example, with a one-half to full point reduction in interest rates (compared to a year or more ago), a family that is paying $3,500 a month in rent can afford the same monthly payment on a brand-new home in a comparable area.
In further explanation, Kerr said that by analyzing “cost to own,” buyers can envision how locking in a low rate on a 30-year loan for a $700,000 home nearly guarantees they will be paying less per month, and per year, to buy
than to rent a comparable home. Even better, they’ll build equity from the start.
From townhome communities in urban and suburban infill areas to homes on more land or in more distant Bay Area counties, builders are actively doing their part to answer the Bay Area’s demand for housing.
“It takes time,” said another builder, COO Michael Van Daele of Van Daele Homes, which has several new-home communities from Morgan Hill and Castro Valley to Lathrop.
“We had to make important decisions several years ago,” said Van Daele. “The conclusion was that we need to move toward a more affordable product in all of these markets.”
An upcoming edition of this column will address how master-planned communities and their builders consciously factor in the conforming loan limits by county to best understand and serve the people in the areas where they are building.