zulu, you’re right, a lot of people are taking notice that there are very few new properties available.  true, tree fern is coming on the market soon but there are a few custom homes in escrow so the overall healthy trend of less inventory and less ‘for spec’ in the pipeline seems to be continuing. 

i think its worth noting that the lack of speculative construction financing naturally lowers the number of spec homes in the pipeline.  bankers tell me not to expect easing of speculative construction lending for at least a year.  not only has this lowered the number of participants, more importantly - it first removed and has barred weaker participants.  what i’ve heard from many of those currently building further confirms this - i usually hear that the home is for themselves not ‘for spec’.  shady canyon is maturing, this in evidenced by fewer than 50 vacant lots, a good portion of which is in the design phase.  from what i’ve gathered would be spec builders that can are waiting for a better marketing window and those than can’t are throwing in the towel and selling off their lots - more than likely to people who plan to build to live in the home (margins on spec building are so low that it won’t attract many).

on new vs resale, anyone would want new/never lived in/barely used and this has made it tough to resell in shady.  however, once newer properties become downright scarce i would expect resales to fare better than they have.  shady canyon is headed in this direction…

sc fan - 20 October 2009 01:39 AM

zulu, you’re right, a lot of people are taking notice that there are very few new properties available.  true, tree fern is coming on the market soon but there are a few custom homes in escrow so the overall healthy trend of less inventory and less ‘for spec’ in the pipeline seems to be continuing. 

i think its worth noting that the lack of speculative construction financing naturally lowers the number of spec homes in the pipeline.  bankers tell me not to expect easing of speculative construction lending for at least a year.  not only has this lowered the number of participants, more importantly - it first removed and has barred weaker participants.  what i’ve heard from many of those currently building further confirms this - i usually hear that the home is for themselves not ‘for spec’.  shady canyon is maturing, this in evidenced by fewer than 50 vacant lots, a good portion of which is in the design phase.  from what i’ve gathered would be spec builders that can are waiting for a better marketing window and those than can’t are throwing in the towel and selling off their lots - more than likely to people who plan to build to live in the home (margins on spec building are so low that it won’t attract many).

on new vs resale, anyone would want new/never lived in/barely used and this has made it tough to resell in shady.  however, once newer properties become downright scarce i would expect resales to fare better than they have.  shady canyon is headed in this direction…

I would say that the healthy of the Shady Canyon RE market is highly dependent upon the stock market and healthy of the economy.  As both improve it will bring in buyers to absorb both resale and failed spec-to-flip homes.  The decrease in inventory levels is happening almost in every city in Orange County along with places like Las Vegas and Phoenix.  All that being said, I still believe that Shady Canyon prices still have some downside left.

Well, from experience I can say that construction financing is pretty much non-existent for owner-builders, and if you’re building for spec it is pretty much impossible to get unless you go for private money at 14-16% plus plus.

As far as profit margin on a spec home goes - it’s not really a question of how much you can make building a spec home in Shady, it’s how much you will lose. I don’t see how you can build a home in Shady, sell it, and make money if you have any financing costs whatsoever. I suppose if you can get a nice lot for $1.2-1.5m or less you could possibly break even. But even with building costs WAY down from what they were before, I think the best case scenario is to break even or get out with a 5-10% loss IF, and only if, you build for cash. So spec building must stop - it will stop - because the profit margins don’t exist any more. I look at costs every day on my own home - I know what previous builders/owners have paid for the same thing and I know I’m paying a fraction of what they did - and if I were to sell my home it would be at break even at best. eBay has become my best friend, especially with plumbing fixtures, hardware and some kitchen appliances. It all adds up, and you can really save money building your own home, but you can’t realistically hope for a profit selling into this market.

I think building a one-off home only makes sense if you are building your dream home; IE, you are willing to pay extra to have it just the way you want it.  Building lone houses on spec seems like an obvious losing proposition to me in this market.  A tract builder has economies of scale at work; a guy building a single house most certainly does not.

Due to this, I think lone empty lots have almost no value in this market.

zulu,

could you share some of the most valuable lessons you have learned and/or are learning by building your dream home in terms of design and / or finish?  what are you glad you did?  what are you glad you didn’t?  what do you wish you did?  what do you wish you didn’t?

i’d appreciate the advice,

sc fan - 22 October 2009 04:35 AM

zulu,

could you share some of the most valuable lessons you have learned and/or are learning by building your dream home in terms of design and / or finish?  what are you glad you did?  what are you glad you didn’t?  what do you wish you did?  what do you wish you didn’t?

i’d appreciate the advice,

Related question.  Do you (Zulu) have a background and/or experience in development/architecture/aesthetics, at the very least.  The reason I ask is that I believe the vast majority of people should never even attempt to build a custom home as they are simply unequipped to address the myriad choices with the forethought an cohesion necessary to produce an appealing outcome.

Looks like 65 Canyon Creek finally closed on 10/15/09 for $3,450,000 or $515/sf.  The owner used conventional financing and the sale was described as a short pay.

39 echo glen recorded just 2 months ago for a cool $10million - a nice property - big lot with spacious backyard with a gazebo, pool, and view, 5 car garage, 10,000 sqft with most of it above ground (very usable/livable) an accomodating, pleasing layout.  that works out to $1000 per square foot.

also, 42 echo glen recorded 2 weeks ago.  it recorded for $4,975,000 for approx 7200sqft which is approx $691psf (it was listed but marked delisted on redfin rather than closed - most likely for privacy). 

in a time when most sales are less desirable properties sold by weaker or distressed sellers, it is refreshing to see some sales with values taking into account location, view, quality, size, design, etc…

CapitalismWorks - 22 October 2009 05:26 PM

sc fan - 22 October 2009 04:35 AM

zulu,

could you share some of the most valuable lessons you have learned and/or are learning by building your dream home in terms of design and / or finish?  what are you glad you did?  what are you glad you didn’t?  what do you wish you did?  what do you wish you didn’t?

i’d appreciate the advice,

Related question.  Do you (Zulu) have a background and/or experience in development/architecture/aesthetics, at the very least.  The reason I ask is that I believe the vast majority of people should never even attempt to build a custom home as they are simply unequipped to address the myriad choices with the forethought an cohesion necessary to produce an appealing outcome.

Hmmm, I can see where you are coming from, but then again, if theya re building a custom home for themselves, then does it matter? as long as you know what you like…

Of course, building a house that would have just as much appeal to future buyers might be a completely different matter. One with such foresight would probably work closely with an architect who could give good advice and guidance.

Geotpf - 20 October 2009 02:17 PM

I think building a one-off home only makes sense if you are building your dream home; IE, you are willing to pay extra to have it just the way you want it.  Building lone houses on spec seems like an obvious losing proposition to me in this market.  A tract builder has economies of scale at work; a guy building a single house most certainly does not.

Due to this, I think lone empty lots have almost no value in this market.

that does make sense, but then again these aren’t normal, run of the mill houses built for the masses…

Got a flyer on my doorstep today for 29 Salt Bush with the description “... at a BERGIN Price… $3,999,900”  I can’t imagine trying to sell a $4MM house, and having the realtard misspell bargain.

Scfan - I’ll know more when we’re done with the house, but the most important thing I’ve found during the building process is shop around because it pays off. There are a lot of subcontractors out of work right now that appreciate work at any price. Others seem to think it’s still 2005 and they can ask whatever they want because we’re in “Shady Canyon” (...uh-huh…good luck with that…). We could easily have spent hundreds of thousands more than what we’ll end up paying for the same materials and same quality. It’s nice to have a custom home, but a lot nicer to have the same custom home for less than what you would pay for a tract home in Turtle Ridge. Come to think of it, it was the overpriced tract homes in the area that made us decide to build in Shady in the first place.

The best thing anyone can do, in my opinion, is visit LOTS of open houses and look for things you like that you can duplicate.  Take a lot of pictures, and share them with your contractor.

By the way, those are pretty high comps on the Echo Glen properties. Maybe I’m not as upside down in my property as I thought .

zulu, how did you and your architect fare during the design process?  did the drc allow you to do all that you wanted to do?

sc fan - 27 October 2009 04:17 PM

zulu, how did you and your architect fare during the design process?  did the drc allow you to do all that you wanted to do?

heh heh, does the DRC EVER let anyone do all that they want? I heard they are just a tad less strict than before…

Fortunately, we did not have to go through the DRC during the design process. That was done by the previous owners. I have heard they are reasonable IF you follow the guidelines. If you try to do something different…well…good luck because you’ll need it.

They’ve actually left us alone so far during building. The property management company, however, is petty and quick to cite you if you are one toe out of line.

Zulu - 07 November 2009 06:51 PM

Fortunately, we did not have to go through the DRC during the design process. That was done by the previous owners. I have heard they are reasonable IF you follow the guidelines. If you try to do something different…well…good luck because you’ll need it.

They’ve actually left us alone so far during building. The property management company, however, is petty and quick to cite you if you are one toe out of line.

if you got a good plan with your lot / liked the plan your lot came with you lucked out big time!  the lots for sale that i have looked at which have plans don’t really have plans that meet my current needs/wants so its design from scratch for me.  as far as the DRC goes, i’ll just accept that its a challenging and expensive process that takes a lot of time.  as far as the outside architecture goes, i really like the look they created for the neighborhood.

sc fan - 08 November 2009 02:04 AM

Zulu - 07 November 2009 06:51 PM

Fortunately, we did not have to go through the DRC during the design process. That was done by the previous owners. I have heard they are reasonable IF you follow the guidelines. If you try to do something different…well…good luck because you’ll need it.

They’ve actually left us alone so far during building. The property management company, however, is petty and quick to cite you if you are one toe out of line.

if you got a good plan with your lot / liked the plan your lot came with you lucked out big time!  the lots for sale that i have looked at which have plans don’t really have plans that meet my current needs/wants so its design from scratch for me.  as far as the DRC goes, i’ll just accept that its a challenging and expensive process that takes a lot of time.  as far as the outside architecture goes, i really like the look they created for the neighborhood.

From the Architects and builders that I have spoken to, it seems that it would be a good idea to get an Architect who has experience in Shady, who could tell you right away what could probably be done (or not) and manage expectations from the beginning…just a suggestion

I haven’t seen 29 BLUE HERON in person, but from the listing pictures, I like this house better than most of the other ones I’ve seen in Shady Canyon.  The only thing that I can’t understand is that if you have a house on nearly a 1/2 acre lot, why do you have to worry about your neighbors looking in on you when you take a bath?

No one knows Shady Canyon more than me because I wrote those restrictive guideline and started the nightmare for the custom home owners. I am to blame. On the other hand, for those who does not have a clue please PM me regarding what could be accomplished. For every poison there is an antidote.

bkshopr - 13 November 2009 06:40 PM

No one knows Shady Canyon more than me because I wrote those restrictive guideline and started the nightmare for the custom home owners. I am to blame. On the other hand, for those who does not have a clue please PM me regarding what could be accomplished. For every poison there is an antidote.

bk, i think having to design within your very strict guidelines has become quite the barrier to entry.  in addition to separating the men from the boys it’s actually helping reduce inventory.  there are a lot of sales happening because its easier and/or less expensive to just buy a custom-spec rather that go thru the design / building process.  in addition to your stringent exterior architectural guidelines the sqft limitations (especially on smaller lots with very limited 2nd floor allowances) really challenge even the most experienced design teams and mercilessly punish inexperienced design teams / owners with inadequate floorplan/bedroom functionality and odd feeling layouts. 

since you are involved at the earliest of design stages with the icdc i wanted to ask if you could tell me if there will be any more custom lot developments on the irvine ranch - looking around i can’t see where one would go.  i don’t see the irvine company trying to pull off a covenant hills scheme where they pass off tract lots as a custom neighborhood/opportunity.

sc fan - 13 November 2009 07:53 PM

bkshopr - 13 November 2009 06:40 PM

No one knows Shady Canyon more than me because I wrote those restrictive guideline and started the nightmare for the custom home owners. I am to blame. On the other hand, for those who does not have a clue please PM me regarding what could be accomplished. For every poison there is an antidote.

bk, i think having to design within your very strict guidelines has become quite the barrier to entry.  in addition to separating the men from the boys it’s actually helping reduce inventory.  there are a lot of sales happening because its easier and/or less expensive to just buy a custom-spec rather that go thru the design / building process.  in addition to your stringent exterior architectural guidelines the sqft limitations (especially on smaller lots with very limited 2nd floor allowances) really challenge even the most experienced design teams and mercilessly punish inexperienced design teams / owners with inadequate floorplan/bedroom functionality and odd feeling layouts. 

since you are involved at the earliest of design stages with the icdc i wanted to ask if you could tell me if there will be any more custom lot developments on the irvine ranch - looking around i can’t see where one would go.  i don’t see the irvine company trying to pull off a covenant hills scheme where they pass off tract lots as a custom neighborhood/opportunity.

I would be intersted too in knowing if there are any plans to open “Shady Canyon 2” by IC.  I’ve heard rumors that it was in developing stages.

Crystal Cove is the other custom destination. Shady has max its entitlement and I don’t think City of Irvine would allow any more additional lots. Besides there is no more land in Shady unless doing major grading to create more pads. Guideline criteria I learned while growing up in the LA ghettos.

The brick detailing for Taylor Woodrows Villas were derived from Downtown Skidrow hotels and sweatshops. They were brick buildings along Spring/ Main and Los Angeles Streets once the financial center of the Western US.

How would Crystal Cove ever be described as a “custom” location?

sanctuary - 16 November 2009 08:19 AM

How would Crystal Cove ever be described as a “custom” location?

Crystal Cove has 2 sections: Lower beach town and the $10 Million+ custom lots with view of Catalina, Long Beach, Balboa Island, Palos Verdes and Malibu out of the same window.

bkshopr - 16 November 2009 08:38 AM

sanctuary - 16 November 2009 08:19 AM

How would Crystal Cove ever be described as a “custom” location?

Crystal Cove has 2 sections: Lower beach town and the $10 Million+ custom lots with view of Catalina, Long Beach, Balboa Island, Palos Verdes and Malibu out of the same window.

if only crystal cove had irvine schools and wasn’t an extra 15 minute commute over the hill…