For Placentia and Yorba Linda residents who were watching anxiously what would happen to the former site of the St. Jude Heritage Medical Center on Yorba Linda Blvd and Prospect, they finally got an answer when homebuilder D.R. Horton raised a banner almost a year ago advertising “New Townhomes” on the street corner.
Named after the former medical facility, “Heritage Crossings” is a community of 80 3-story townhomes that start with 2 bedrooms, 2.5 bath designs with 1,176 square feet all the way up to 3 bedrooms (plus den), 3.5 baths with 1,966 square feet.
Prices at the time of my visit started at $496,990.
As a society, we’ve been trying to design housing to provide the best balance of proximity with open spaces and quiet. As a result, some far-fetched ideas never make it and some are built with lofty expectations.
At the height of the housing boom of ’04-’06, investors were literally drowning in credit lines and cash and the housing market seemed like a no-brainer for growth. Since the new generation of buyers didn’t seem to mind about shrinking backyard spaces (or no backyard at all), builders started to think even bigger.
With successful rejuvenated Downtown areas like the Gaslamp District in San Diego gaining headlines, it became easier to pitch to investors that buyers have come full circle: Suburbs are out; downtown living is in. California freeways are getting slower and slower. Couples are getting married much later in life and having less kids or no kids at all.
After all, everyone longs for living like the characters of “Friends” and “Seinfeld” where they’re only a short elevator ride away from bars, subway access and, shopping, right?
Well….sort of. There are many factors that made these mid-rise developments immediate flops. For starters, the lifestyle would not be like Seinfeld because most would still need to commute to just about everywhere. Public transportation in Southern California has always been very limited due to our love for cars and freeways. Socially, Orange County has been notorious for being “snobs” that don’t even know who lives next door. Forget about the idea of going downstairs to the local bar or hangout where “everyone knows your name.”
While the fancy marketing and amenities were enough to get crowds to the models, buyers knew the idea was a contradiction on many levels.
Going Urban 2.0
After the countless price reductions and conversions to rentals, builders were able to learn many lessons.
Brookfield’s “The Domain” community is directly across the street from The Packing District of Anaheim.
No project was impacted by the flop more than Anaheim’s “A-Town” project that was supposed to take cues from San Diego’s Petco Park.
“Gone are the grandiose ideas to change Anaheim’s skyline with 11 high-rises, an urban village of 2,681 homes and 150,000 square feet of office and retail space near Angel Stadium….
Plans now call for building 1,400 to 1,742 condominiums and apartments, along with up to 50,000 square feet of shopping and office space grouped into eight neighborhoods spanning 43.1 acres, according to a revised development application submitted Thursday to the Anaheim Planning Department.”
After reading the article, most of the blame was placed on the housing market. I have a feeling the builders are in denial or just don’t get it.
As expected, home builder Standard Pacific’s marketing efforts drew large crowds to the their grand opening on May 17th. Even temperatures in the 90s didn’t stop homebuyers from taking a peak while eating the complimentary snacks.
My expectations of Avignon were thoughts of simply larger designs of Standard Pacific’s Montserrat community. Those were quickly exceeded when walking to their plan 3, which was first on their model tour.
Designs are more immersive with arched entryways, grand entrances, and ground level master bedrooms available on some floor plans. Even to a Real Estate agent, it’s tough to distinguish standard features beyond the breathtaking decor that seems to have increased over the prior communities. Of course, none of those decorations and landscaping will come with the homes with exception of the very-expensive models which will be sold in the last phase.
Avignon will release their first phase of homes on May 24th. Buyers will be required to sign up on a first-come, first-serve priority list.
Unlike Coral Ridge and Montserrat, unobstructed city lights view lots aren’t available due to the location of the community. It will be interesting how the international buyers (mostly Chinese) respond. Many I’ve spoke to have a “view or nothing” mentality. However, the far-superior designs might give buyers enough to compensate for the lack of a view.
A few years ago, I got excited about Anaheim going through a transformation that would bring shopping and nightlife to neglected areas outside of the Disneyland Resort. There was promise of a downtown area “similar to the Gaslamp District” next to Angel Stadium. However, it seems all of the plans for the infamous “Platinum Triangle” have been put on hold indefinitely until builders and city officials decide what exactly will be built.
Meanwhile, the downtown area near Anaheim Blvd and Broadway is something that has transformed into a thriving promenade with little fanfare. Mid-rise modern apartments have been built next to chic-styled restaurants and Anaheim’s Civic Center.
“The Domain” by Brookfield Residential is the 2nd mid-rise property to be built in the area after Harbor Street Lofts were constructed in 2010.
Unlike the recent “urban flops” that were constructed (i.e. – Stadium Lofts on Katella and Harbor Street Lofts) where drastic price reductions were needed, the Domain seems poised to be a hit as the Real Estate market has improved and the location actually has several establishments worth visiting several times a week such as Farmer’s Market on Center Street, Umami Burger, and Anaheim Brewery. HOA dues are pretty reasonable for a mid-rise at $243 per month.
Brookfield also seems to have learned from the shortcomings of nearby complexes in order to cater to groups beyond just “20 somethings.” Unlike the Stadium Lofts, The Domain features select residences with direct access garages.
Home designs are as small as 1 bedroom, 1 bath with 897 square feet and can be large as 3 bedrooms, 2 baths with 1,644 square feet with an attached 2-car garage.
Here’s more good news: There will be a significant number of “Plan B” residences (2 bedrooms, 2 baths, 1,103 sq ft) classified as “affordable” units where downpayment assistance will be available. The program is also available toward other designs as long as funding remains. There has been $6M set aside for the program.
Similar to nearby Colony Park, buyers with lower household incomes are eligible to use Anaheim’s Housing Program to assist them in obtaining homeownership. The program offers up to $125,000 in downpayment assistance.
Here are some of the requirements of the program:
– Income limits are based on household size. For example, a household of 2 cannot earn more than $83,700 (using the moderate income table).
– Buyers cannot own more than $92,000 in cash assets.
– All persons in household must provide proof of permanent US residency.
– Applicants must complete HUD’s Certified Homebuyer Education Program.
Call me at 714-501-2732 for more information or use the form in the “Contact Edwin” link above.
In a prior blog, I mentioned that Standard Pacific will be opening a new luxury community in the Blackstone Community of Brea called “Avignon”.
For those who have been keeping up with Blackstone’s development, expect homes to be similar in lot size to the Castillian community sold 2 years ago. Living sizes will be slightly larger and exterior facades will be more extravagant.
The Grand Opening will take place on May 17th and starts at 10 AM. Prices will start in the low $1,000,000s and have living spaces up to 5,485 square feet. Most lots will have canyon or hillside views. A few homes will have city lights views and are expected to be priced near $1.8M.
Before we get into what Mello Roos is, let’s look at some of the amounts published by builders in Blackstone and La Floresta in Brea:
Emerald Heights by Shea Homes: $976.43 for Plan 2 & 3; $1,226.43 for Plan 4
Coral Ridge by Shea Homes: $1,226 for Plan 1 & 2; $1,412.76 for plan 3
Paseo by Standard Pacific Homes: Amount not published. The brochure states “approximately 1.13%.” I estimate the amount to be about $728 when working backwards form the sales prices and likely will be higher or lower depending on floor plan purchased.
Ventanas by Van Daele: Approximately $800 depending on homesite
Avenida by Standard Pacific Homes: $800 per year depending on homesite
What exactly is Mello Roos?
The term itself comes from The Community Facilities Act of in 1982 authored by Senator Henry J. Mello and Assemblyman Mike Roos. The Act created “CFDs”, or Community Facilities Districts which are established by local government agencies to raise community funding.
In other words, it’s a way for a builder to finance the infrastructure needed to create a new development. This is commonly done through selling bonds. The duration of the Mello Roos depends on the life of the bond. In some areas of Placentia near Champions Sports Complex, the bonds were for 15 years.
From the tax bill above, you’ll see the “basic levy rate” of 1%. In California, this is the base tax rate for a property. North Orange County cities are typically about 1.03% to about $1.15% in communities that “don’t have Mello-Roos.” In Real Estate lingo, while it’s not technically correct, having Mello Roos is any amount significantly above that range. In the bill above, you can see that CFD’s are inline with normal bonds.
However, there’s a line item only described as “other services” for an additional $2053.44! This amount is not technically “Mello Roos” per the definition above.
That was intentional. Don’t worry — you don’t have to be an expert on Mello Roos when buying a home. (However, your Real Estate agent and CPA should know the difference.) What’s important is to know is if the total tax exceeds the normal rate in the area. Once it does, sales data shows it will affect the sales price of a home. Since it boils down to monthly payment for most buyers, the effect is similar to HOA dues.
So, next time you want to irritate your friends on the subject or Real Estate and someone asks, “How much is the Mello Roos in that community?” You should answer, “The question you should be asking is: How much are the additional bonds and assessments above the base tax rate?“
As mentioned on several of my prior blogs, Chinese buyers for North Orange County continue to dominate new construction and the high end market.
During the boom of 2003-2006, subprime lending fueled bidding wars as home prices reached levels where it was impossible to afford a nice home on a 30 year fixed mortgage — unless you were a Doctor, Lawyer or Executive of a company.
This time around, low interest rates, former homeowners who had a foreclosure or short sale seeking to purchase, low inventory, and increasing international buyers are pushing prices upward without an end in sight.
Before subprime and International Buyers, prices had to be inline with local wages.
With International Buyers continuing to purchase, is the Affordability Index becoming less relevant?
Here are a few significant stats from the Bloomberg Report below:
– The amount of millionaires in China have more than DOUBLED since 2008
– 60% of Chinese with $1.6M or more in assets are in process or considering emigration with the #1 destination (40%) being the U.S.
– According to the Department of Homeland Security, Chinese ranked 2nd to Mexicans for receiving legal, permanent residency.
Recently, I observed a builder’s release at Coral Ridge in Blackstone. My client and I realized that the prices had gone up almost $200,000 from the last release. Almost everyone in the room were Chinese and eyeing one lot that sold for almost $1.6M.
Then you discover there are 30 people on the list ahead of you.
Should you move on? Or figure it’s worth a shot?
Here are few questions to ask in order to know if you should proceed:
1. When did the list start? I just visited the sales office of Paseo at La Floresta and someone “in the know” informed me that there are over 130 people on the list. However, we both agreed that with the list over 1 year old, there are many that have either found another home to purchase or no longer interested.
2. How many are on the list? It’s tough to get a straight answer if you’re a prospective buyer. The sales reps might be trained to not disclose this information due to the risk of scaring away a buyer. On the other end of the spectrum, disclosing a low number might make a buyer suspicious of the current pricing. From my experience, the builder’s representatives are more willing to give this information to agents.
3. Are you flexible on floor plan and lot location? Many buyers forget that if you’re eyeing the corner lot with a panoramic view, it’s likely the buyers on the list will be hot after it, too. Having flexibility will increase your chances tremendously.
4. How much have prices changed since the prior release? Now we’re entering forecast territory. If prices have risen significantly (and you still can afford it), it may eliminate some of your competition.
Even if the questions above are not looking good in your favor, you’d be surprised how many on the list are “market watchers.” In other words, they went through all the hassle of getting pre-approved only to “defer” their home choice to the next phase.
During Coral Ridge’s last phase release in Blackstone, there were over 30 people in the room and 3 homes remained unsold.
With every visit to each builder office, you hope to collect floor plans, community information, and pricing with the hopes of staying focused. Often, you’ll arrive home confused and not knowing what just happened.
Why not start with a plan?
This guide compares square footage, schools, prices, location, HOA dues, and even addresses to the sale offices. Included in the report are the following communities: