Here is the latest Antelope Valley Report written by my colleague Bei Qin.
April ANTELOPE VALLEY REPORT 2008
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Antelope Valley NEEDS 15,000 New Housing Units By 2012
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April’s High Lites:
· AV Economic Outlook in 2008
· April AV Real Estate
· Author’s Corner
North L.A. County Real Estate and Economic Outlook in Antelope Valley
Mark Schniepp of California Economic Forecast, and Wayne Yamano of John Burns Real Estate Consulting, gave their assessment of the California and Antelope Valley economies on April 25, 2008 in Lancaster . The conference was sponsored by First American Title. Below is a summary of their forecasts. Each speaker is quoted as necessary.
Mark Schniepp
- In 2009, job growth and population growth will create demand for housing, industrial development, and retail businesses
- By 2012, the AV is projected to add 38,000 new residents. By 2012, will once again face a housing shortage and will need 12,000 to 15,000 new housing units. “We see the next housing cycle as having to play catch up to the growth.”
- The AV will have a “V” shaped recovery, referring to lines on a chart that reflect contraction and growth.
- “Over the long haul, people are going to live where people can build homes, and that’s the AV.”
- Presently though, the AV economy has been severely damaged by the housing and credit problems
- Over the next 5 years, 5,800 new jobs will be created, mostly in education and health care
- The financial sector is in a depression, housing is in recession, but outside of those areas, the economy is just in a slowdown with much of the economy actually expanding
He commented that it takes time to work off the supply and time for the public to regain their confidence and courage to reenter the market, housing or land. But eventually, a recovery in real estate both home values and land values, in that recovery, will make new price highs.
Wayne Yamano
- In 2 or 3 years, investors will once again be making money in land buying opportunities
- Every down cycle is the beginning of the next up cycle
To builders and financial services people, Yamano said, “There will come a day when you will once again make a lot of money.”
For more information go to http://www.californiaforecast.com/publications.html
Antelope Valley News
April 9th- In an effort to try and knock down at least some of the excess supply in the housing market, several lenders hold a 120 home auction at the AV Fairgrounds. Foreclosing lenders hired Irvine , Ca. based, Real Estate Disposition Corporation which has conducted similar home auctions around the country. 1,000 people showed up to bid, as homes sold quickly, at times, only minutes apart.
April 14th- The Board of Trustees of the local community college, Antelope Valley College , officially names their Palmdale south campus as, “Antelope Valley College Palmdale”. The Board debated a host of names that were arrived at via public survey. The 60 acre campus, which is located on 25th St East , about ¼ mile north of Pearblossom Hwy , was dedicated by school administrators and trustees on April 29th.
April 23rd- The east side of Palmdale is playing catch-up with a commercial growth spurt of its own. At 47th St East & Ave S, there is already a Super Wal Mart, an Albertson’s market, and a Stater Brothers market. In addition to those 3 corners, the NW corner, called Park Plaza , which will soon have a Chili’s restaurant, a Starbucks, and 22,000 sq feet of office space. They will be located next door to the existing McDonalds / ARCO. North up 47th St East , to Ave R, a Super Target and Home Depot will anchor the 47th Street Pavilion. The center will also have a Staples, Ross Dress for Less, PetSmart, Bath and Body Works, Famous Footwear, and a Cold Stone Creamery. Home Depot will be open by June 5th, and Target by July 27th. The rest of the businesses should be open by the Holidays. At NEC of 40th St East & Ave S, are plans for a 12 acre neighborhood shopping center that will be anchored by a Fresh & Easy market, 24 Hour Fitness, and a Longs Drugs. The developers were thrilled by east Palmdale’s demographics. Within 3 miles of the intersection of 47th St East and Ave S, live 65,000 people whose average household income is over $60,000 a year.
April 28th- Eliopulos Enterprises is moving ahead with their Palmdale west side condos and apartments. The project, which is already being graded, is located on the south side of Rancho Vista Blvd & Tilbury Dr, near Ave O-8. The developer describes the project as luxury townhomes and condominiums. The project, in total, will add 429 units, 1,265 bedrooms, and 729,809 sq feet of living space to the west side of Palmdale. The units will range in size from 1,181 sq ft with 2 br 2 baths to 2,354 sq feet with 4 bedrooms and 3 ½ baths. The project will have park like settings along with walkways, sitting areas, clubhouses with fitness / entertainment areas, swimming pools, spas, bar-b-cues,picnic sites, and a children’s play area. Eliopulos Enterprises is paying more than $3M in developer fees to the City of Palmdale . The City and Eliopulos came to a compromise that allowed EE to pay a fee schedule that is a combination of the new and old General Plan for the area, saving EE $3.7M.
April 29th- The west Palmdale Ramada Inn is getting a multi-million dollar makeover by its new owners. The 135 room hotel, which is located at 300 W. Palmdale Blvd , when all done, will be a 3 star hotel with 4 star amenities. The makeover is intended to turn the property into a destination for high-end travelers. The new owners want to make the Ramada Inn a resort property. The renovation work is being done piecemeal to avoid shutting down the entire hotel. Almost every aspect of the hotel will change, with the lobby and restaurants being completely redone. Each guest room will have refrigerator, microwave, and large flat screen TV. Company officials envision that the hotel will serve the film and aerospace industries. Other major hotel projects around the AV include:
- Embassy Suites, a 7 story hotel located near 5th St West & Ave P-4
- Staybridge Suites, nearby the Embassy Suites, a 99 room extended stay hotel
- Marriott Springhill Suites, 20th St West & Ave J-12 in west Lancaster
- Hampton Inn, 87 rooms, near Clear Channel Stadium (minor league baseball park)
- Homewood Suites, 92 rooms, also near the stadium (Fwy 14 & Ave I)
Defense & Aerospace News
The Antelope Valley Board of Trade made its annual lobbying trip to Washington DC and heard a lot of optimism regarding the region’s aerospace industry. Members of the Board of Trade met with officials of the valley’s three largest aerospace contractors, Boeing, Lockheed Martin, and Northrop Grumman.
Since the Board’s last visit, one year ago, employment at Boeing’s at Plant 42 has increased by 100. While
Boeing’s maintenance program on the space shuttle is winding down (the space shuttle is being retired in 2010), Boeing is involved heavily in the airborne laser program and maintenance of the B-52 and B-1 bombers. Northrop Grumman employs 2,077 at Plant 42. Their main project right now is the building of the fuselage for the Joint Strike Fighter, the F-35. NG also builds the unmanned Global Hawk and performs maintenance on the B-2 bomber. Northrop is also working on an unmanned bomber for the US Navy, called X-47. X stands for experimental. The X-47 first flight is expected in 2009, followed by a second aircraft by 2010. A test carrier landing is expected by 2011. Lockheed Martin’s operation at Plant 42 manufactures portions of the F-22 Raptor air to air fighter and the F-35 Joint Strike Fighter. As to how many of these planes will be purchased by the military services, that number is still up in the air. Lockheed Martin also has their classified (top secret) Advanced Development Projects, known as the “Skunk Works”, located at Plant 42. Out with the old, in with the new. In the case, the old is the F-117 NightHawk, and the new is the F-22 Raptor and F-35 Joint Strike Fighter. Lockheed Martin, at its Plant 42 site, is beginning to transition its work force from the F-117 into other programs, such as the F-22 and F-35 and other classified development programs in the Skunk Works Division. Presently, 120 employees are assigned to F-22 modification work, while 400 others work on specialized parts for both fighters (F-22 & F-35). The Skunk Works has about 500 different projects in the works, one of which, is the Advanced Composite Cargo Aircraft which would make future military cargo planes lighter and cheaper, reducing parts by 80%. It is also believed that the use of composites would reduce corrosion and fatigue. Currently, Lockheed Martin employs 3,750 at Plant 42 and another 800 at Edwards Air Force Base.
===============================================Author’s Conner:
Which is better for capital appreciation: land or homes?
I got this question a lot, so let me go ahead and address this issue. First, if you are investing for income, then a home or some rental units is your best option. Land rarely provides income. If you lease it, or carry a note when you sell land, it can produce income. To be fair though, leasing land is not easy, and when you sell your land, you may want cash to invest in another piece. Land does not provide income. However, if your goal is capital appreciation, then land is a clear winner. See below.
If you bought a home in the AV area, in its last market bottom (1995 – 1996) by 2005, it was up 200%. If you bought your home in 2001, by 2005 it was up 100%. From the bottom of the market cycle in the mid 1990’s, to its cycle peak in 2005, home prices were up 100% to 200%. No doubt, that is a very good ROI, after all, one has to live somewhere. BUT if you bought land in the mid 1990’s and sold it in 2005 or 2006, you were probably up 500% to 1,000%. Land bought in 2001 or 2002 made 300% to 500% moves by the 2005-2006 period. I bought one parcel in 2001 for $16,000 per acre, and sold in 2004 for $45,000 per acre. It was most TRIPLE within 3 years. In 2000 some prime Quartz Hill acreage was sold for $10,000 per acre. By 2005 and 2006, buyers were paying $80,000 to $100,000 per acre some similar acreage. All an investor need is to have PATIENCE. The patience to wait for a bottom to form in the land market, the fortitude to buy when everyone hates the market, and then the patience to hold for the next bull market.
AV Existing Home Sales Data - As of April. 30, 2008
(source: AV MLS)
- Existing Homes sold year to date: 1092
- Existing homes projected to sell this year based on current sales pace: 3,100
- Existing median home price in 2007 : $ 298,000
- Existing median home price increase in 2008 vs. 2007 : - 2%
2007 - Existing homes sold from 1/1/07 to 12/31/067: 3,362
2007 – Existing median home price in 2007: $$ 304,000
2006 - Existing homes sold from 1/1/06 to 12/31/06 : 6,839
2006 – Existing median home price in 2006 : $330,000
2005 - Existing homes sold from 1/1/05 to 12/31/05 : 7,554
2005 – Existing median home price in 2005 : $293,000
Antelope Valley New Home Sales Data - as of April 20th, 2008
(source: The New Housing Monitor, a Hanley Report)
-New homes sold year to date - 423
-New homes sold since last month, 142
-New homes selling per day in 2007 – 3.52
-New homes projected to sell this year at current sales pace- 1,286
-New home sales, year to date vs. same period last year (- 48%)
-Number of open subdivisions with sales in 2008- 52
2007 - total of all new homes sold- 1,720
2006 - total of all new homes sold- 2,584
2005 - total of all new homes sold- 4,579
2004 - total of all new homes sold- 2,503
2003 - total of all new homes sold- 1,820
2002- total of all new homes sold- 1,162
1990- total of all new homes sold- 4,900 +
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LAND SALES ACTIVITY- By Antelope Valley Multiple Listing
Land Sales Land
Escrows Escrows
Opened closed
2000 Total 307 260
2001 Total 407 315
2002 Total 679 482
2003 Total 1,240 890
2004 Total 2, 372 1,658
2005 Total 3,376 2,572
2006 Total 2,989 2,118
2007 Total 1,773 1,401
2008 4 Months total 189 181
