Ventura co star 7.05.06

http://www.venturacountystar.com/vcs/business/article/0,1375,VCS_128_4822599,00.html

Builders and economists are reducing their forecast for the number of homes to be built this year in California as several large developments are preparing to come on the market in Ventura County.

Reacting to a slowdown in the market, homebuilders are adjusting plans to make sure there are enough houses for interested buyers — and no more.

Ventura County Star
"The Ventura County market is a little slower than it was last year, but Oxnard has always been a desirable place," said Steve Seemann, manager of the Riverpark Legacy joint venture in Oxnard.

Seemann said plans for the 1,800-home development have not changed and there are currently homes for sale. He said homes become available slowly as companies obtain building permits in small batches. About 189 building permits have been issued so far.

Seemann said he believes the slowdown is temporary, caused mostly by media hype about a real estate bubble.

The California Building Industry Association revised its outlook on June 21, saying it now expects home building to be 15 percent to 20 percent below 2005 levels, with about 170,000 to 180,000 homes to be built statewide.

The CBIA projects that Southern California will be strong, while the San Diego, San Joaquin Valley, Sacramento and Bay areas could have significant declines.

The UC Santa Barbara Economic Forecast Project is expecting slightly fewer homes to be built in Ventura County than last year.

Director of Economics Dan Hamilton said the Forecast Project is expecting from 3,100 to 3,300 homes to be built in the county this year. Through March, there had been 929 residential building permits issued in Ventura County.

Last year, there were about 4,261 permits issued countywide, including 1,500 by March.

"(This year) is going to come in a little lower, but not historically low," Hamilton said.

KB Homes reduced its financial forecast for the year on June 15, even though the company had sold 10 percent more homes in the six months that ended May 31 compared with the same period the previous year. Net income for the period was up 25 percent to $381 million.

"There is still strong demand in Ventura County and the San Fernando Valley," said Ray Gomez, spokesman for KB Homes. The company will start building shortly on The Meadows development in Fillmore, which is all two-story family homes with three bedrooms.

In a June 15 conference call, the company said it was going to try to make the construction process more efficient, reduce overhead and be more selective in land purchases in response to the changing market.

Gomez said the market was "normalizing." The company, he added, will be able to adjust easily because the homes are only built after there is a buyer lined up with a deposit.

Builders face financial risk by building houses on speculation that buyers will be looking to purchase.

Lennar Corp., one of the nation's largest home builders, was not far behind KB Homes in announcing a large second-quarter profit but with a similar reduced outlook for the year. Lennar is building the Harmony development in Ventura.

The company reported that it was "managing inventory well," although there had been more contract cancellations and the sales staff had been using more incentives and discounts.

Lennar President Stuart Miller said he believes buyers are waiting to see if there is a better deal coming.

"They have placed themselves on the sidelines awaiting a better price but remain ready to buy," he said in a conference call.

The revised forecast for new homes comes at just about the same time that the California Association of Realtors announced that it is expecting the pace of sales in existing properties to slow from its previous forecast.

Seemann said the slower resale market does have some effect on the sale of new homes, but RiverPark has many smaller homes or townhomes that might be attractive and more affordable to first-time buyers.

The development eventually will have 1,800 homes, including apartments and large single-family homes.

Currently, RiverPark has homes selling for up to $700,000 and some units designated affordable housing that are listed at $160,000 for people who qualify.