By Brian Bullock / Staff Writer / bbullock@santamariatimes.com
All Santa Maria Building Official Bob Marshall has to do to monitor construction activity in the city is look at his department’s plan-check review sheets.
When construction was active, the monthly document was routinely about three pages long with around 40 projects listed on each page. From 2008 to 2010, the list barely filled a single sheet.
“Plan-check reviews give the building department an idea of what’s in the pipeline and where it is in the process,” Marshall said. “We’re up just a little bit from last year — more residential work.”
The plan-check review list in the last week of April featured 44 projects ranging from the massive Windset Farms greenhouses and packaging plant on Black Road to installation of a gas water heater at Central City Burgers in the Town Center.
The residential work Marshall mentioned is beginning to show more than a faint pulse in many cities on the Central Coast. Earth is being moved and walls are going up on several projects in the Santa Maria Valley, including La Vigna single-family homes and St. Claire apartments in Santa Maria, Old Mill Run and Rice Ranch in Orcutt, Providence Landing and Briar Creek in Lompoc and Creekside Village in Los Alamos.
Briar Creek is an affordable-housing project getting under way after a three-year hiatus and Creekside Village is a development of rental units targeted for local farm workers.
Much of the local residential construction of single-family homes is priced from the mid-$400,000s and up, which is the level where many local builders are re-entering the market.
“It’s exciting because we were shut down for about a year because of the market and reorganization,” said Debi Nobrega, sales manager at Old Mill Run, a development of Newport Beach-based Capital Pacific Homes. “We’re seeing empty nesters moving from the Bay Area or Southern California.”
The development is typical of many residential projects hit hard by the recession that created both a lack of buyers and an abundance of financing troubles for both builders and buyers. Nobrega said Capital Pacific built and sold two dozen homes in its south phase in 2008 and 2009 and shut down almost all of 2010.
The company is beginning construction of three of the remaining 29 homes in its north phase, which is giving a little boost to the local building industry.
Dave Mitchell, superintendent at Old Mill Run, said the project will employ around 20 subcontractors and about 100 people overall. Building homes of 1,900 square feet and larger, priced at more than $400,000, makes residential construction financially feasible, he added.
“It’s difficult, but do-able and possible,” said Mitchell, who said he was scraping for work for about two and a half years when residential construction was minimal.
Construction employment was one of the hardest hit sectors of the economy during the recession. Jerry Bunin, governmental affairs director for the Home Builders Association of the Central Coast, said since the peak of the market in 2005-06 construction has been down 80 percent, and 22 percent of the state’s construction workers are jobless.
Just how much the residential market collapsed is evident in reviewing how many permits have been issued over the past three years.
Since 1990, an average of 947 residential building permits have been pulled in Santa Barbara County with 2002 the high-water mark with 1,732 issued. For the past eight years, those numbers have been dwindling, dropping most dramatically from 2007 when 723 permits were issued to 2009 when only 213 were pulled.
Bunin said Santa Maria routinely accounted for 37 percent of the county’s total building permits, while Lompoc had about 6 percent.
Building in Santa Maria fell from 317 permits issued in 2007 to 29 in 2008, 11 in 2009 and 153 in 2010. Likewise, Lompoc dropped from 112 in 2007 to none in 2010.
A lack of buyers who could qualify for loans, a glut of distressed or foreclosed homes on the market and the difficulty for builders to obtain financing are the factors Bunin said fueled the free-fall.
“The problem is it’s so much cheaper to buy distressed property that it makes more sense to do that,” Bunin said, adding that new home construction costs are $60,000 to $100,000 more than the $211,000 median-priced home in Santa Maria in March.
Building new homes within reach of many buyers is a challenge for most companies. Rice Ranch, which at build-out would add more than 800 homes to Orcutt, was just getting its project under way when the market began to fail.
“Unfortunately we broke ground two years ago right in the middle of the mess,” said Jim Laloggia of Western Pacific Land Group.
During the crash, Rice Ranch closed its doors briefly and is now offering homes in its first two neighborhoods at prices reduced by approximately $75,000.
Laloggia said sales are picking up at both Rice Ranch and at Monarch Dunes, the company’s other master-planned community in Nipomo. The company has sold 32 homes in Rice Ranch over the past year and a half.
While most new home developments are priced at $400,000 and up, the Towbes Group is trying to keep its new homes in Santa Maria’s La Vigna development as inexpensive as possible.
“As long as we can keep the prices under $300,000, we think there is a market for those right now,” said Michael Towbes, who has been building homes in the area since 1959. “It’s difficult but we think there is some demand for new product rather than those resales that have been foreclosed or beaten up.”
The 21-home second phase of the gated La Vigna development follows the first 22 homes that were built in 2008 and will feature 118 homes when it is finished.
“I think in general the coast is better than inland areas. Riverside and San Bernardino counties suffered from over-building, as have some areas in the Central Valley,” Towbes said. “I think everyone has suffered to some degree. I’ve never seen this substantial of a drop in construction. I think builders would like to build if they can make their projects feasible.”
Towbes also has one of two apartment complexes on Santa Maria’s plan-check list. Sienna Apartments were originally planned as condominiums, but have been redesigned into 118 apartments.
Lyon Communities is building the St. Claire Apartment Community on the west side of Santa Maria. The company purchased the project from D.R. Horton and is finishing it. The first 40 units were built and rented out almost immediately, said Suzanne Maddalon, vice president of sales and marketing. When it’s finished it will have 128 units of 1,257 square feet.
“There is definitely a pent-up demand. Through market research we found out there was a ton of demand in the area for something new,” Maddalon said. “Especially recently, there is a resurgence in multifamily construction.”
Peter Rupert, director of the Santa Barbara County Economic Forecast, agrees with Maddalon. He said the current crop of young professionals is marrying and starting families later in life and not buying homes, while older couples and individuals are down-sizing in the current economy.
“People are kind of down on housing,” Rupert said. “Housing might not be that great of an investment for most people any more.”
The median value of home prices in Santa Maria has fallen from $452,271 in 2005 to $240,333 at the end of last year with the biggest drop coming from 2008 to 2009, when the median price fell by $91,000.
Whether that continues appears largely dependent on other factors in the economy.
“We’re not seeing a lot of signs that it’s picking up, but we’re not seeing any signs that it’s getting any worse,” Bunin said.
