By DENNIS WYATT
Managing editor of the
Manteca (Calif.) Bulletin
The typical new home built in Manteca five years ago was just shy of 3,000 square feet.
Then at the bottom of the new housing market when 10 permits were issued in February 2008 the average size fell to 1,577 square feet.
New housing starts in May 2008 saw the average size climb up a bit to 1,760 square feet. And city building statistics from last month show the typical home start in Manteca now is averaging 2,768 square feet.
While home sizes have bounced back what hasn’t are building costs. It cost $25,000 more to build an additional 1,000 square feet last month compared to the cost in May 2008. And it is only $39,000 more to build the 2,768- square-foot home last month than it did the 1,577-square-foot home in February 2008.
May to May comparisons show in 2008 the average new home cost $136,616 to build and in 2009 it cost $161,921. Those prices do not reflect between $50,000 and $65,000 per home in growth fees and connection charges or the land costs and developer cost and profit.
It reflects the overall depressed construction market were prices have dropped substantially as firms compete aggressively to keep working. The City of Manteca experienced the same thing last week in two water line projects that were expected to cost $865,000 but came in with acceptable low bids reflecting a combined cost of only $393,000.
Fifty-seven homes have broken ground in May and June in Manteca.
It reflects an upswing in new home sales as it took builders from November to April – six months – to sell that many homes.
At the same time existing home sales are holding steady - despite a three-quarters percent bump in interest rates- thanks in part to a backlog of 216 pending sales. Most loans are locked in once there is an accepted offer on a home.
As of Monday there have been 567 deals closed on existing homes within Manteca’s city limits so far in 2009. It reflects a sales pace of 3.4 homes a day. If the trend holds 1,246 homes will close escrow by year’s end. That would surpass the record 1,165 existing homes sold in 2008.
New-home builders are crediting three things for the uptick in new home sales:
•The $8,000 first-time buyers federal tax credit that is good for any home that goes into escrow by Dec. 1 of this year and as long as the buyer hasn’t owned a home in the previous three years.
•The $10,000 state tax credit for buying a new home.
•The lowest prices in more than a decade.
New home sellers across Manteca are reporting increased traffic plus a slight uptick in sales thanks to the $10,000 stat tax credit for a new home buyer as well as the $8,000 federal tax credit. Several builders have a good-sized standing inventory – there were about 15 finished homes south of the Highway 120 Bypass - that had not been sold at the start of the month. Deals are now being made on a number of those homes thanks to aggressive pricing and the tax credit as well as low interest rates.
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. Floresheim 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.
Even with the jump in home starts in April and May, Manteca’s new home pace is a bit slower than 2008 when 238 new homes were built in Manteca. The current pace, if it holds, will end 2009 with 221 new homes in Manteca.
To contact Dennis Wyatt, e-mail dwyatt@mantecabulletin.com
