The news earlier this week that residential building permits issued nationwide rose in August provided one more glimmer of hope that the housing market, despite still-erratic buyer demand, might finally be bottoming.
Optimists can point specifically to certain markets where builders and developers are moving forward with projects, such as the nine counties that comprise metro Indianapolis, where builders filed for 357 permits in August, 23% more than a year ago. Year-to-date, permits in this market were up 5%, to 2,588.
Next week, the Planning Commission of Milpitas, Calif., near San Jose, is scheduled to review two housing projects that could add more than 1,000 housing units to that market: D.R. Horton’s 24-acre Harmony community with 276 housing units; and Citation Homes’ already-approved condo project that the builder wants to bump up by 93 units (bringing the total to 732) by adding a fifth floor to two of its three buildings.
PulteGroup has several communities in various stages of development in Austin, Texas, where single-family home sales in August rose by 33% over the same month in 2010. Earlier this month, Pulte opened its 376-home Preston Village in North Austin and 329-home Cold Springs development in Leander, Texas. Homes in these communities will start at $160,000. (Builder was unable to contact Scott Eckley, Pulte's vice president of sales in Austin, for further comment.)
And in Foster City, Calif., between San Francisco and Palo Alto, Sares-Regis Group this week initiated vertical construction on The Plaza, a 307-unit apartment project that is part of the city’s redevelopment of its Pilgrim/Triton neighborhood.
Jeff Smith, vice president of Sares-Regis’ multifamily division, traces the genesis of this project back six or seven years. That’s when the insurance company Northwestern Mutual, which had owned the land in Foster City for a generation, approached the builder/developer about “repositioning” the property, on which there had been mostly tilt-up light industrial buildings.
Sares-Regis, which had managed several properties for the insurer and is the development manager on The Plaza project, brought in two other property owners to combine their assets with Northwestern’s to create a 21-acre master plan that, says Smith, will eventually have 730 residential units and 300,000 square feet of commercial and office space.
That plan was approved in 2008, and all the permits were in place. But what really moved it forward, says Smith, was convincing Northwestern to commit more than $100 million to finance the entire project. Sares-Regis also got Northwestern to engage the design-build firm Devcon Construction early in the process.
The Plaza’s apartments will range from 650 to 1,250 square feet, and the community is expected to open in late 2012 or early 2013. Amenities will include a park, a playground for kids, three courtyards, a fitness center and a media room that Smith says will be more like an Internet cafe.
One-fifth of the housing units will be set aside for families at below market rates. (Of the 60 units being set aside, five will be offered at moderate rental levels, 40 at low levels, and 15 at very low. The area median income (AMI) in San Mateo County for a family of four is $101,600. So moderate units are calculated at 120% AMI, low units are at 80% AMI, and very low at 50% AMI.) Smith says it’s too early to guess what market-rate rents will be. But Gary Pike, a spokesman for Sares-Regis, notes that rents in this area have increased by double-digit percentages over the previous six months. Smith adds that later stages of the Pilgrim/Triton redevelopment have enough flexibility to possibly mix in some for-sale housing units.
Sares-Regis has several other multifamily projects in the works in the Bay Area, including a 132-unit luxury complex in Redwood City, Calif., that is scheduled to break ground by the end of this year. “We’re still working with the city on entitling this,” says Smith.
John Caulfield is senior editor for Builder magazine.