Calabasas Home Builder Not Scared Off by Tough Market

Calabasas-based Montage Development Inc. is doing something unusual — it’s building and selling new single-family homes in the San Fernando Valley. The firm is targeting first-time homebuyers for its new urban communities, located in Canoga Park and Pacoima. Canoga Park’s Ingomar Village opened last month. Already, three homes at the gated community are in escrow, and construction on the project’s first 12 homes is expected to be completed next month. Another project — Branford Village in Pacoima — opened last May. Since then, the company has sold, or opened escrow on, 42 of the 62 three- and four-bedroom homes in the project’s first phase. The home sales — and a partnership with a major real estate investor — are helping the local developer rebound after it was hit hard by the economic downturn. “It’s definitely picked up,” Montage President Stephen Ross said. About five years ago, the company had nearly 40 employees. After the market crashed, Montage cut its staff down to seven workers. Within the last year, the company has hired on workers, now employing about 15, Chief Operating Office Steven Raft said. “We are a much leaner, more effective operation,” he said. Ingomar’s three- and four-bedroom homes average 1,655 square feet and start at $359,990. At Branford, homes average 1,450 square feet and start at $269,990. In the last month, Montage said 11 escrows have opened there. Montage has plans for more communities, as well, including 26 new single-family homes in Sylmar and a 4.5-acre community in Winnetka that will have 100 multifamily units and 23 single family homes. Several other apartment projects in the Valley also are planned. “Right now, there are not a lot of buyers of land, so I think that is favorable for us,” Ross said. “We are king of warehousing land.” Still, Ross said, the financing to build a new community is difficult to obtain. Hopefully, he said, by the time the company break grounds on future communities the financing will open up. But for Ingomar and Branford, the company had a much easier time. The developments are partnerships with Los Angeles-based CityView, which invests institutional money, mostly pension funds, in urban real estate projects. CityView provides the capital and owns the properties, while Montage builds. “There is a noticeable uptick in the market at large,” CityView Executive Chairman and former HUD Secretary Henry Cisneros said. Cisneros said CityView plans to come to a decision on when to break ground on the final 63 homes at Branford in the coming months, but brisk sales bode well for starting sooner rather than later. Cisneros said the community has done well because the homes are an appealing size and are located in an urban community with nearby job centers, attracting many minority families that are often large and multigenerational. “We build for the workforce, near employment centers at prices that working families can afford,” he said, adding the far flung suburban markets have a long road to recovery. Ingomar Village, located at 21160 Ingomar Street, will eventually have 26 three- and four-bedroom single-family homes. When the second phase at Branford is finished, the gated community — located at 12661 Branford Street— will have 125 homes. The remaining 63 homes will be larger and will have five bedrooms, Raft said. The community also features a pool and club house. Ross said much of the success at Branford Village is due to the package Montage provides and the low interest rates for FHA loans. In a bid to attract former renters, Montage gives buyers amenities their landlords often provide, including a refrigerator, landscaping, window coverings and a washer and dryer. “We can do it more efficiently and for less money, so we include that in our price,” Ross said. The company also pays the buyer’s closing costs, the first year of insurance and first month of homeowner association dues, if the buyer uses Montage’s preferred lender Los Angeles-based Mortgage Capital Partners. “It’s a big difference, because whatever cash they do have they have that much to put into their down payment, get a lower loan and a lower monthly payment,” Raft said.