Introduction to the Crisis
The Orange County home building industry is facing a significant challenge due to a lack of available land, resulting in a substantial decline in home sales. Top developers in the area are selling fewer homes, with sales plummeting by 23% compared to the previous year. This downturn is attributed to the scarcity of land available for building new houses.
The Numbers Behind the Decline
The top 13 builders in Orange County sold a combined 2,253 attached and detached homes last year, down from 2,912 sold in 2023, according to figures from Zonda and local developers. Single-family home sales fell by 31% to 908, while attached townhome and condominium sales declined by 15%. Nine of the 13 biggest builders reported fewer homes sold compared to the previous year, with Tri Pointe Homes, Landsea Homes, Taylor Morrison, Trumark Homes, and KB Home showing the biggest drops.
Causes of the Decline
According to Allison Rawlins Tift, a senior vice president at Land Advisors Organization, a consultant group with an office in Irvine, the primary cause of the decline is the lack of available land in Orange County to build new houses. "The home builders all echo the same sentiments about wanting or needing any mapped/entitled/finished lots available in the county, but there is a similar lack of supply of future lots available for home builders to acquire and then build upon," Rawlins told the Business Journal.
Impact on Home Builders
Of the nine companies that reported year-over-year sales declines, Irvine-based Tri Pointe Homes reported the largest drop, selling 95 houses last year, 67% fewer than in 2023. Scottsdale-based Taylor Morrison sold 25 detached homes last year, a 59% drop from 2023. It didn’t sell any attached homes, compared to eight in 2023. San Ramon-based Trumark Homes sold 52% fewer homes, while Los Angeles-based KB Home reported a 44% drop in home sales in Orange County last year to 53 homes.
Exceptions to the Trend
Miami-based Lennar had the highest volume of sales in Orange County last year, closing on 936 attached and detached houses, but sales were 15% fewer than the 1,099 homes sold the prior year. Meanwhile, Pennsylvania-based Toll Brothers sold 94 attached houses in Orange County last year, compared to 82 in 2023, a 37% drop. Its detached home sales plunged 49% to 172, from 339 in 2023. However, three companies managed to grow their businesses, while Mission Viejo-based PulteGroup reported flat sales.
Success Stories
Irvine-based California Pacific Homes reported the biggest jump, with a 200% surge to 135 homes sold in Orange County last year, including 111 single-family houses, which leaped 484%. The Seal Beach-based Olson reported 104% year-over-year growth, with all 92 attached homes sold.
Conclusion
The lack of available land in Orange County has led to a significant decline in home sales, with top developers selling 23% fewer homes compared to the previous year. While some companies have managed to grow their businesses, the overall trend is a cause for concern for the home building industry in the area. As the demand for housing continues to rise, it is essential for developers and policymakers to find solutions to address the scarcity of land and ensure the sustainability of the industry.
FAQs
- Q: What is the primary cause of the decline in home sales in Orange County?
A: The primary cause of the decline is the lack of available land in Orange County to build new houses. - Q: Which company reported the largest drop in sales?
A: Irvine-based Tri Pointe Homes reported the largest drop, selling 95 houses last year, 67% fewer than in 2023. - Q: Are there any companies that have managed to grow their businesses despite the decline?
A: Yes, three companies managed to grow their businesses, including Irvine-based California Pacific Homes, which reported a 200% surge in sales. - Q: What is the impact of the decline on the home building industry?
A: The decline is a cause for concern for the home building industry, as it may lead to a shortage of housing supply and impact the overall economy of the area.
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