Southern California home builders expect the sales momentum of 1984--the best year since 1980--to carry them into another vintage year.
They feel their industry, once again, has led the California economy out of another down cycle and are confident that the pace of construction and sales will continue during 1985.
For The Record
Los Angeles Times Sunday March 31, 1985 Home Edition Real Estate Part 8 Page 21 Real Estate Desk 1 inches; 49 words Type of Material: Correction
First Financial Group Inc., Encino-based building firm which ranked 27th in the 1984 ranking of major Southern California home construction firms as reported March 24, wants to assure its inquisitive lenders that the company's year-end inventory of 144 homes--which it incorrectly reported to The Times--should have been only 14.
They were right in their predictions last year about "a brighter year" and in the 14th annual Times Survey of Residential Construction and Sales Activity, published today, they have high expectations for an even better year.
In the survey's index of median sales volume and projected sales volume throughout seven Southland counties, respondents' enthusiasm indicated that sales projections for 1985 will reach the 157.0 mark, the highest projected index figure since the survey began. It topped the 156.3 recorded for the high-flying days of 1978.
Participants in the voluntary survey number 141, up from 132 last year, and include builders and developers from Los Angeles, Orange, San Diego, San Bernardino, Riverside, Ventura and Kern counties. Tabulation for the index was limited to 131 firms because 10 companies did not report sales volumes for the past year.
(The Times Marketing Research Department, which created the index, considering that responding firms vary from year to year because of the voluntary nature of the survey, equates the 1971 median sales and the 1972 median sales projections--from the initial survey--to 100.0. This allows an overall trend comparison rather than a dollar-figure comparison that would not be meaningful.)
The 128.3 mark for actual sales by 131 firms in 1984 represents the fifth highest ranking among the annual surveys and translates to a median sales total of $11.8 million. The median figure for 129 firms projecting sales for 1985 was $20.1 million.
Coincident with this survey, the Bank of America released its monthly housing industry report showing a 53.7% increase in California housing starts for January, while sales of existing dwellings fell about 6%. The median price for a California house was reported as $110,987.
The report said the number of housing starts in single-family and multiple units, on a seasonally adjusted annual rate, was almost the same--119,600 and 119,300, respectively.
(Nationwide, housing starts dropped 11% in February, the largest fall in almost a year, according to the U.S. Commerce Department.
Housing analysts believe that a 68% jump in apartment construction starts in January reflected the concern of investors and builders over pending or possible changes in depreciation allowances and their consequent decision to get into production before tax laws are changed.
But there was an erratic drop of 36.7% in apartment construction in February which housing industry leaders could not readily explain.)
The William Lyon Co., Newport Beach, topped the list of builders for the fourth consecutive year. Watt Industries of Santa Monica was second and Pacific Lighting Real Estate Group, Santa Ana, was third. Others in the top 10, in order, were Coastfed Properties, Beverly Hills; Lewis Homes, Upland; Pardee Construction Co., Los Angeles; Irvine Pacific Development Co., Newport Beach; Ponderosa Homes, Irvine; Fieldstone Co., Newport Beach, and Sunrise Co., Palm Desert.
Residential sales for 1984 reported by 131 building company survey participants totaled $3,872,500,000. That was an increase of 60.5% over the 1983 sales of $2,412,300,000 for 130 firms.
Of the 131 companies reporting sales for last year, 129 gave projections for their 1985 sales. Based on their sales of $3,872,500,000 last year, these firms are looking for a 43.1% jump in sales--to $5,541,400,000 this year. Last year, the 129 firms had projected an even larger jump of 78.7% over their 1983 sales.
Eight unranked firms, with no sales to report in 1984, projected sales for 1985, ranging from $2 million for Auerbach Construction Inc., Santa Monica, to $92.5 million for State-Wide Developers Inc. of Los Alamitos.
Other Southern California building firms, particularly those whose status as public companies makes it difficult or unethical for them to predict future building plans, do not participate in the annual survey. For instance, Los Angeles-based Kaufman & Broad Inc., the state's largest home builder, reported sales of $121.1 million in Southern California last year (1,004 single-family homes) and would rank ninth on The Times list.
The 1984 leader in total units built was fourth-ranked Coastfed Properties, with 2,019 units. The firm also led in apartment unit construction with 1,899. Lewis Homes, fifth ranked, led all developers in single-family units with 971, and William Lyon, first-ranked in total sales volume, topped the field in condominium units built with 787.