Sales of new homes throughout the Southland in 1988 continued at an unprecedented pace while production expectations for 1989 soared to another high.
The 18th annual Times survey of residential construction of a seven-county Southern California area reveals high optimism among home builders, who project a 29.5% increase in sales during the current year. Actual sales in 1988 increased 21.2% over 1987.
Builders, although wary of rising interest rates affecting their sales and conscious of a possible year-end slowdown, nevertheless expressed confidence in offering their firms' projections for 1989 to The Times. (See accompanying story.)
The survey showed 1988 to be the fifth consecutive year of housing production, topping sales and projection marks established during the hectic period of sales and construction in the 1977-81 span, based upon an index devised by The Times Marketing Research Department.
Because participation in the survey is voluntary and the number of firms taking part varies every year, an index of median sales and projected sales has been computed for all participating firms in each of the 18 Times surveys.
By making the 1971 median sales and the 1972 median sales projections (both from the first survey) equal to 100.0, the median sales and projections from each survey have been compared to this base, creating an index. (See Page 23).
Upward Trend Continues
This allows for an overall trend comparison rather than a dollar comparison, which would not be meaningful. The median for actual 1988 sales for the 194 firms reporting sales was $29.6 million. The median projection for the 190 firms projecting sales for 1989 was $28.9 million. The indexes show the trends from 1971 and 1972.
The 1988 sales volume index of 321.7 marks an all-time high as the upward trend continues with a 22.7% increase over the previous survey.
The index for 1989 projections is 225.8, which is 7.4% higher than the 210.2 figure projected for 1988.
But some things didn't change. The William Lyon Co. of Newport Beach and Watt Industries of Santa Monica repeated their respective places as leader and runner-up among the record 194 companies participating and ranked in 18th annual survey.
Lyon reported sales of $655.5 million; its 1987 sales figure was $506.3 million. The company exceeded its 1988 sales projections of $577 million by $78.5 million, building a total of 4,564 units--34% of them single-family homes, 53.4% apartments and 12.6% condominiums.
Total Southland sales--in Los Angeles, Orange, San Diego, Ventura, Riverside, San Bernardino and Kern counties--hit the $11.4-billion mark for the 194 reporting firms. That was a 21.2% increase over the $9.4 billion figure recorded by 177 companies in the 1987 survey.
In major shifts among the builders, Barratt American Inc. of Irvine advanced from 19th place in last year's ranking to 8th in the new survey, while Pacific Scene Inc. of San Diego dropped from 9th to 62nd place.
Hampton Development of Valencia, ranked 194th (last place), is expecting the largest gain in sales this year--1,700%. It had only $300,000 in 1988 but has set its sights on a $5.4-million goal in 1989. RWR Development Inc. of Van Nuys, ranked 124th, is projecting the largest dollar increase, $152 million from $17.4 million in 1988 to $169.4 million in 1989, a 873.6% jump in home sales.
Seventh-ranked Kaufman & Broad Home Corp. of Los Angeles predicts it will have the second largest dollar increase, $150.4 million, from $249.6 million last year to $400 million in 1989, up 60.3%.
The Southland builders produced 74,402 housing units last year--up only 1% from the 1987 output of 73,652 units, even though there were 17 more firms reporting building activity in the current survey.
Of that output, single-family construction represented the largest number--36,316--or 48.8% of the total, up slightly from the 48.1% reported for 1987 construction.
Most Single-Family Homes
Kaufman & Broad recorded the largest number of single-family homes, 1,833, built last year. That figure accounted for 90.5% of the firm's total production while third-ranked Lewis Homes Group of Companies of Upland completed 1,580 single-family homes, 68.7% of its 1988 output.
Of the 190 firms that reported sales for 1988 and projections for 1989, 80% (152 companies) forecast an increase in their production, expressing a bit more optimism than the 79.5% of the 171 builders who made projections in the previous survey. Apartment construction totaled 27,601 units, or 37.1% of all building activity during 1988, slightly below the 1987 figure of 38%. The Lyon Co. built 2,439 apartment units, topping the field and that figure amounted to 53.4% of its total output.