Builders carry on despite pandemic

HOA developments among most common in California.

By Lynette Bertrand, Communications Manager, CACM

California’s housing shortage was substantial heading into 2020. Not enough houses were being built, and that hasn’t changed with the arrival of the pandemic early this year. Builders say, if anything, COVID brought this challenge more to the light and fast.

“Now people are having to use their homes as an office and school. That’s certainly had people looking at their current situation and questioning whether it’s appropriate,” said Eric Nelson, Vice President-Community Development for Trumark Homes. “People living in more urban centers are looking outward. Does it make sense to move out of the city for more elbow room and a bigger unit? That’s a direct result of COVID.”

Nelson said that new housing development didn’t slow down, but rather picked up this year despite COVID and the ensuing financial crisis.

“You may not see it on the ground, but the amount of projects we’re pursuing through approvals is at an all-time high. At Trumark, at least,” he said. “We have a lot of projects.

Most are infill locations where you take old sites and repurpose them. That’s really where you are going to see more push in housing in California—it’s in infill.”

Steven LaMotte, chapter executive officer for Orange County for the Building Industry Association, agreed.

“I’m on multiple city council meetings where developments have been approved. It’s good news. There’s the push to go to more suburban areas. In Orange County, we’re still considered suburban. They want homes and space.

“The majority are infill projects donein more mature cities,” he added.“We’re moving more towards an infillenvironment.”

INFILL IS WHERE IT’S AT

Infill is defined as filling in a small site ina mature, developed area as opposed tolarge swaths of land in outer areas likethe Inland Empire. Part of the reason infillhas become popular is that California hasmade it hard to push outward. Sprawlis expensive, and developers say theexorbitant cost takes the incentive awayfor them to go out into the edges of thestate like the desert.

“We have several projects that are old rundown shopping centers or industrial sites that we’re converting into housing,” Nelson said. “You’ll see old parts of areas being revitalized, and housing will be the key metrics to do that. Even school districts are looking at surplus property and asking themselves do we need this anymore?”

The cost to build new homes today is high and continues to increase as the state ratchets up requirements including environmental regulations, high impact fees and a long processing time. That doesn’t include land costs, which are also high.

While this is an issue across the state, the Bay Area is particularly problematic, said Ryan Leptien, president of The Helsing Group, who works with developers on new community developments.

“It’s harder to build in the Bay Areabecause of city conditions and the costof land,” he said. “They have a hard timetrying to figure out ways to build.”

PANDEMIC CHALLENGES

Builders who started projects on land that was purchased before the pandemic continued, though there were some setbacks. Particularly, builders were finding it difficult to obtain building permits because many cities were shutting down or operating on reduced staff.

LaMotte said new construction in the early days of the pandemic was not considered an essential business. “A lot of businesses rallied around essential workers and were able to get construction added as an essential business up and down the state,” he said.

Then moving homes through construction, including building permits and inspections, both done through cities, was another issue. Cities were figuring out how to inspect homes remotely using technology, LaMotte said.

“So far there hasn’t been any problemssince this was figured out,” he added.“Everyone has been adapting.”

HOA GROWTH NOT STOPPING ANYTIME SOON

Sources we reached out to for this article noted that developments with HOAs continue to be the most popular type of new housing in the state.

Nelson of Trumark Homes said just about every new development at his company recently except for one had an HOA.

“Almost every city we’re in mandates that because of the projects we do,” he said. “We have private streets and a lot of private components that the city can’t maintain properly. It is definitely something that will continue to grow for a number of reasons. Most cities are mandating that as part of development. When you’re in infill spaces, you will end up with private entry ways and streets and cities have to have a way to manage and to maintain that.”

“I’ve seen a shift,” Leptien said. “In the past cities were more inclined to include landscaping and lighting in a Landscaping and Lighting Assessment District. Now we’re seeing a movement more towards private. That has an impact on assessments. We’ve been involved early on the process working with builders to make sure they understand — this is going to be private versus CFD (communities facilities district).”

CFD are special taxes levied to finance or maintain public improvements required in the development of property.

DIVERSE BUYERS, DIVERSE NEEDS

Now more than ever, builders are having to meet the needs of a larger set of buyers as they vary so widely and include Millennials, Baby Boomers and Generation X. Flexibility is key with floorplans that are convertible.

And with the pandemic forcing the remote work trend on many Americans, dedicated office space and work-at-home areas is something developers are considering for future projects. Architects are reconfiguring open floor plans since the need for more private spaces will become more necessary.