IRVINE, Calif.—Nancy Schwartz has seen a downturn or two. With 25 years of experience in the home building industry, she made it through the slumps of the 1980s and early 1990s. Now, as escrow manager for John Laing Homes' south coast division in Orange County, Calif., she's busy navigating the current decline.
That hasn't been an easy job; Orange County has posted some of the most dramatic swings in the nation. For the first six months of the year, gross sales of all new homes in Orange County declined 26 percent, according to Hanley Wood Market Intelligence. While not as bad as Washington, D.C., with a 32 percent decline, or San Diego, down 40 percent, Orange County took it on the chin in another area: cancellations. For the first half of 2006, the O.C. led the nation with a cancellation rate of 24 percent, edging out Las Vegas's 23 percent nix rate. The average base price for a new home also dropped more, by over 9 percent, than anywhere else in the country, albeit from a hypoxic $934,922 to $848,343.
With Schwartz's homes in escrow for an average of eight months, that means keeping buyers on track is more challenging than ever. “Every downturn is different,” Schwartz says. “Some of them have come as a gradual slide. This one has been just like going over a waterfall. We've gone over the edge, and I don't know if we're at the bottom yet.”
8:00 A.M. Schwartz arrives at the John Laing offices, in Irvine's tony Park Place office complex, ready for a new week. She's dressed in a crisp black suit, and this morning, has a spring in her step. Her team landed a major victory on Friday, finally closing a buyer who had been on the fence, threatening to cancel, since June. It was a small victory; while her division was closing as many as 120 units a month previously, she's now looking at just 77 closings through the end of the year.
Meanwhile, cancellations have been cropping up at a maddening pace; between 20 and 25 percent of her homes are falling out of escrow. On her filing cabinet, under a Wonder Woman bust and Mickey Mouse stuffed animal, there's a conspicuously placed placard, a gift from her husband. It reads, “Nancy Schwartz: The Lean, Mean Escrow Machine.”
8:15 A.M. Schwartz checks messages and scans e-mail, keeping an eye out for notes from Steve Kabel south coast division president, and John Laing CEO Larry Webb. This morning, though, there's someone else who needs a quick response. Edgar Rodriguez, the division's controller, wants an update on October closings. Schwartz responds, and makes a mental note. The weekly construction meeting, scheduled for 10:00 a.m., will give her a better feel for where she stands.
8:45 A.M. Schwartz's phone rings. It's Rodriguez. “Hello, Edgar. It closed on Friday,” she says, confirming the good news from last week. The conversation moves on to a second home that's nearing its final stages, but hasn't turned the corner yet. “That one is going to be moved off until next week, because the documents haven't come back yet.” Providing an explanation that's pure Orange County, she elaborates. “I had to FedEx them to the wife in Arizona, and now she has to find where her husband is on the globe.”
9:15 A.M. Schwartz heads for the office of Jared Miller, south coast's sales manager, to relay a buyer's special option request. It's past the cut-off date for this type of option—a built-in media nook—but Schwartz thinks it will fly. “In the past, the home counselor would have told the buyer, ‘it's not an option at this point,'” Schwartz says. “Now, you do whatever it takes to make sure we get to close.”
9:30 A.M. Back in her office, the phone rings; it's Khristine Yap, the south coast's assistant controller. Schwartz confirms Friday's close and updates her about the Arizona couple.
Learn more about markets featured in this article: Los Angeles, CA.