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Nation's Home Builders Convene in Dallas

January 25, 1987|DAVID W. MYERS

DALLAS — California's home builders are approaching the new year with caution, despite the continued drop in mortgage rates and predictions of another banner year for housing.

Meanwhile, California architects and designers say 1987 will bring changes in the way new homes in the state look, both outside and inside. Thousands of builders and others involved in the state's construction industry were among those here attending the National Assn. of Home Builders' annual convention last week.

"We think this year will be a lot like last year, with no big increases in production," said Steve Scarborough, president of home builder Standard Pacific's Orange County operations. He figures his firm will produce 625 to 675 homes this year, after building 625 last year.

"Most areas in Southern California will experience healthy growth, with no particular area expected to flourish," added Ira Norris, president of Upland-based Inco Homes. Increasingly, Norris said, the success of a development depends on the particular builder and his product--not the development's geographic area.

Many Golden State builders said they'll focus this year's efforts on building for the "move-up" market--buyers who are selling their current homes and "moving up" to larger, more expensive houses. "Interest rates are down, and that means people can get more for their money," Scarborough said.

Many of the move-up buyers are well-heeled baby-boomers who want "very good homes in very good locations," Scarborough added.

At times, the boomers' willingness to part with their cash has bordered on the frantic.

Not long ago, more than 150 people--many of them in BMWs and recreational vehicles--"camped out" for several days at Standard Pacific's Turtle Rock Crest development in Irvine, hoping to land one of the 29 homes that were going on sale. The homes, priced from $375,000 to $425,000, sold out in a day.

Will Use Lottery

This year, said Scarborough, the company has shelved the camp-outs and will use a lottery to determine who gets to buy a home in another new Irvine project. "Those 'camp-outs' were pretty hectic," the executive said.

Not all builders, however, think focusing on a particular type of buyer is a good idea.

"It behooves us to build for both the entry-level buyer and the move-up market," said Edward C. Parker, a vice president of Los Angeles-based Marlborough Development Corp. "We want to avoid concentrating in any area that may be hurt by layoffs within any one company or industry."

Although California's economy is expected to remain strong this year and interest rates should stay low, builders said there are some problems on the horizon.

The concerns they mentioned most often are the rising fees builders must pay to fund new schools and other projects, and the public's growing support of slow-growth movements.

Some builders also said that skilled labor is getting more difficult to find, especially in the red-hot markets of Orange County and the Inland Empire.

Others are worried about the effects of the 15% tariff President Reagan recently imposed on lumber imported from Canada--a move that is expected to raise the cost of building an average-sized home by about $1,000.

Lots are expected to get smaller this year, primarily because the cost of land is rising sharply. In Irvine, for example, an acre of raw land suitable for homes ranges from $350,000 to $500,000, according to Art Danielian, an architect based in Newport Beach.

To combat rising land costs, the architect added, a growing number of builders are using much smaller lots--about 55 feet wide and only 55 feet deep, compared to the conventional standard of about 55 feet wide by 110 feet deep. The savings, he said, "can cut $40,000 off the price of a home."

Most buyers, however, are loath to accept smaller lots and scaled-down houses. So a growing number of builders are erecting conventional-sized "zero-lot-line" homes on the smaller parcels.

Z-lots homes usually don't face the street. Instead, the back of the house is placed directly on a side property line. This eliminates the narrow side yards created when a home is placed in the middle of a lot, and transfers that space to the yard surrounding the Z-lot home's front door, which usually faces the other side property line.

By utilizing the Z-lot concept, small lots look bigger than conventional parcels.

"A builder gets about 7 1/2 lots per acre with the zero-lot program, but only 3 1/2 lots if they use a conventional program," said Danielian.

The wants and needs of the nation's 78 million baby-boomers will continue to be felt inside California homes, as well.

According to Gadi Kaufmann of consultancy Robert Charles Lesser, Beverly Hills, high-income baby-boomers shopping for a new home want a family room and living room, breakfast nook and a spacious master bedroom suite at least 14 by 16 feet.

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