The Hammers Are Flying Again

Last year, it took home builder Braemar Group months to sell the 23 new homes in the initial phase of its Pico Rivera development. Earlier this month, Braemar put another 23 Pico Rivera homes up for sale and got a totally different response.

In a little more than two weeks, Braemar has sold more than half the single-family homes, which are priced at $175,000 and up.

“It’s better than we expected,� said Braemar Executive Vice President Avi Brosh, who credits a strong marketing campaign and increased buyer confidence in the economy and job market. “The demand is very deep for new housing.�

Despite severe winter weather earlier this year, California home builders and industry observers say they expect 1997 construction levels to be the highest so far this decade as the business slowly but steadily recovers from a devastating real estate slump.

The number of homes and apartments built this year should reach about 120,000--a jump of more than 25% above last year’s disappointing results and the highest level since 1989, according to the Construction Industry Research Board. Single-family homes would account for nearly 75% of total units built.

Builders are bidding up land prices as they grow confident about demand for future developments. Home buyers are already snapping up new houses built in established communities. Last year, 50 new homes priced in the $400,000 to $500,000 range on the Westchester bluffs near Playa del Rey sold before they were even built.

Despite this year’s expected jump, however, construction activity will remain far below the building boom of the mid- to late 1980s, when each year saw well more than 200,000 units constructed. No one expects a return to such levels any time soon.

“It’s not a dramatic turnaround,� said Bruce Akins, president of Irvine-based Catellus Residential Group. “In many regards, it might be a more healthy recovery. It’s just not like the boom-and-bust syndrome our industry usually goes through.�

Some builders have faulted government regulations and fees for hampering the industry’s revival.

In Sacramento on Tuesday, an estimated 500 builders gathered to celebrate the first “Home Building Day� by meeting and lobbying legislators for relief from laws and development fees they claim make it harder to build and sell homes. Legislative leaders said they will form a commission to explore the builders’ complaints.

“Most sectors of the economy have recovered better than we have,� said Robert Rivinius, chief executive of the California Building Industry Assn., which organized the events in Sacramento. “Regulation drives the prices up, which means that less people can afford to buy.�

But economists and most builders say other factors--ranging from low levels of consumer confidence to high unemployment rates--played greater roles in sending the new-home market into a tailspin during much of the decade.

Adding to the industry’s woes was the dramatic drop in newcomers to the state and the large numbers of Californians that fled to other states, according to UCLA demographer Nancy Bolton. Net immigration--the difference between the number of people leaving and arriving--in California went from a gain of 421,000 people in 1990 to a loss of 82,000 in 1994.

“It just caused a very large swing in the need for new houses,� said Bolton, who estimated that one out of three newcomers ends up buying a house.

But now the flow of residents has begun to turn in the state’s favor and is expected to add to the total population next year. That in turn will help boost the demand for new housing, Bolton said.

The strength of the new housing market is also expected to spread southward this year from Northern California, where buyers in San Jose have camped out overnight to put offers on homes.

Randall Lewis, marketing director of Upland-based Lewis Homes, said sales at most of the company’s Southern California projects now average six or eight a month compared with two monthly sales during the depth of the recession.

“Finally people are beginning to see that [conditions are] getting better in Southern California.�

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Residential Revival

Emerging from a long slump, residential construction in California is expected to top the 100,000-unit mark this year for the first time in five years. Residential building permits for homes and apartments issued in the state since 1985, in thousands:

1997: 120.0*

* Forecast

Source: Construction Industry Research Board