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Saturday, Jun 10, 2023


By SHELLY GARCIA and ELIZABETH HAYES Staff Reporters The paucity of available lots and spiraling cost of land are changing the profile of residential real estate developers in the San Fernando Valley. As the Business Journal’s list shows, nine of the top 15 residential real estate developers are publicly held. More and more publicly held companies are entering the market because they can access public capital markets to raise the financing necessary to make land deals in today’s high-priced markets. The list, compiled by the Business Journal and the Meyers Group, a real estate information firm in Irvine, ranks developers based on the number of homes sold in the San Fernando, Santa Clarita and Antelope valleys. “The public companies clearly have gained market share,” said Bob Bray, national sales and marketing director for the Meyers Group. “They can access capital more quickly and they’re able to build homes more quickly, and they have a whole marketing machine to sell them.” Not only do publicly held companies typically have greater resources than private-sector builders to acquire land, they can also use those greater resources to acquire other developers, especially those that own large tracts of developable land. That way, they can avoid the time and money required to get the necessary entitlements for raw land. The most dramatic example of this trend is Lennar Homes of Mission Viejo, which rose to the No. 1 position on this year’s list due to its acquisition of Pacific Greystone Corp. and West Venture Development, both formerly Burbank-based homebuilders. Lennar, a subsidiary of Miami-based Lennar Corp., began making inroads into the L.A. market two years ago, when it acquired Stevenson Ranch, a large, master-planned community near Santa Clarita. Last year, projects that had been started by Pacific Greystone and West Venture accounted for more than half of the 452 homes Lennar homes sold in L.A. County. Lennar has since gone on to acquire Orange County-based Polygon Communities, which has a large presence in the Inland Empire. “We’re very big believers in the long-term viability of California as a homebuilding market,” said Western Region President Jon Jaffe. “L.A. is obviously a huge part of that, with a huge economic base and population. L.A. County is something we wanted to focus on.” Brey said the trend of out-of-towners acquiring local homebuilders began in 1997. “It’s really heated up where you now have many companies looking to acquire” in this area, he said. Lennar unseated Kaufman & Broad Home Corp. as No. 1 on this year’s list by selling 394 homes in the San Fernando, Santa Clarita and Antelope valleys, more than the 273 homes Kaufman & Broad sold. Other publicly held developers on this year’s list are Centex Homes, in the No. 4 spot with 202 homes sold; Western Pacific Housing, No. 5 with 158 homes; Richmond American, No. 6 with 126 homes; the Presley Cos., No. 7 with 112 homes; Beazer Homes, No. 9 with 94 homes; Brock Homes/Ryland Homes, No. 10 with 92 homes; and Toll Bros., No. 13 with 58 homes. As developable land has become virtually impossible to find in the San Fernando Valley, homebuilders of all sizes have turned their focus to the Santa Clarita and Antelope valleys. But even the Antelope Valley, which has not enjoyed the same economic rebound as other areas of L.A. County, is becoming increasingly pricey, developers said. “We’re not able to do a project of 50-plus homes in the Antelope Valley because prices have shot up,” said Tom Day, vice president of construction for Portrait Development LLC, a privately held developer in Ontario, which sold 58 homes in the area last year. “We haven’t been able to get into any land up there, but the big companies have.” Companies like Portrait Development are relying more on the general contracting segment of their business, and even partnering with some of their larger competitors. Day said his firm tries to find partnerships with larger companies that can buy land but that do not have in-house building capabilities. While the supply side is constrained by limited developable land, the demand for housing is strong, fueled by strong job growth and a steadily increasing population. Further motivating homebuilders is that the median price of a new home in L.A. County rose 16.67 percent during the 12 months ended March 31, reaching $168,000, according to the Myers Group.

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