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New homes getting bigger

Average size 55% larger than what sold a year ago

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New homes getting bigger

A roofer from Production Framing Systems Inc. finishes up for the day as construction continues on new houses in Woodside Homes at Union Ranch East on Saturday.

HIME ROMERO/The Bulletin/

POSTED February 9, 2009 4:19 a.m.
Manteca new home builders got off to a big start in 2009 – big as in house sizes.
There were 15 new single family homes started in January compared to 13 in the same month in January of 2008.
The real big news, though, was in the size of the homes. The average home started so far this year in Manteca has 3,303 square feet compared to 2,099 square feet in January 2008. That’s 55 percent larger.
The average cost of construction – the actual cost of building the home excluding land, builder margin, subdivision infrastructure, and growth and connection fees – was up just 28 percent.
It underscores what sales representatives for Atherton Homes and other builders have been saying for the past three months: Move-up buyers attracted by the lowest mortgage rates in 30 plus years as well as some of the best new home bargains due to aggressive marketing and drops in construction costs are starting to make their move.
The bulk of the new home construction is taking place in Union Ranch East as well as Del Webb at Woodbridge north of Lathrop Road and Tesoro in southwest Manteca. Florsheim Homes has virtually cornered the $249,990 to $310,000 new home market with their Valley Park and Valley Blossom collection southwest of Airport Way and the Highway 120 Bypass. While Florsheim is aiming for buyers who are frustrated with trying to duke it out on the foreclosure market for a deal, the other builders are aiming at the move-up market of qualified buyers that is starting to grow stronger with each passing month.
Making it more unusual is the fact the new home buyers are predominately Manteca and other Northern San Joaquin Valley residents. Just three years ago, those coming from west of the Altamont Pass looking for homes dominated Manteca’s new home market.
There were 224 new homes sold in Manteca in 2008 compared to 1,165 existing home resales. More than 90 percent of the resales were foreclosures or distressed homes. The larger new homes selling so far in 2009 range from $375,000 to $450,000 as starting base prices. The 74 resale homes that closed escrow in January of this year had a median selling price of $177,450.
The trend among move-up buyers – who have a challenge selling their homes against the sea of foreclosures – is to do one of two things.
Realtors and new home sales representatives say that those caught in such a position opt to aggressively price their homes within $15,000 to $25,000 or so of the foreclosure market or else they keep their existing home to rent. A typical foreclosure has cosmetic and structural issues that need to be addressed that can easily add $10,000 to $20,000 to the overall price.
Those who keep their homes to rent usually have 10 or so years into their homes in terms of payments and did not encumber them with home equity loans. They can rent it out at a rate in today’s market that more than covers the mortgage payment and taxes. At the same time, they are able to buy a move-up home or – in the case of Del Webb – a downsized home for a different lifestyle and take advantage of near-record low rates and aggressive pricing.
The slight uptick in winter construction compared to last year has also prompted the reappearance of a phenomena not heard for three years in Manteca – the steady hum of power saws and the singing of hammers on Saturdays.
The last two years has effectively shaken out the builders in the most precarious financial situation. At the same time, the remaining builders have reduced their standing inventory. At the end of January, there were 27 homes in new builders’ standing inventory south of the Highway 120 Bypass compared to almost a hundred a year prior.
The end result has seen builders scrambling to build homes when they do sell prompting more Saturday work days for contractors and subcontractors.
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