CHN Blog

Carbon-neutral community in the works in Valencia

Plus, high-end homebuyers are outpacing the rest of us, home equity soars in the first quarter, excess state land becomes affordable housing, and LGBTQ home buying and ownership practices.

Solar-panel systems, electric charging stations will help curb the environmental footprint of 21,500-home master-planned community

Developer FivePoint has started building the nation’s largest net-zero carbon master-planned community in Valencia — a mere 35 miles north of where bumper-to-bumper traffic contributes greatly to global warming.

FivePoint, the developer of the award-winning and groundbreaking FivePoint Great Park in Irvine on the former Marine Corps Air Station, has detailed an ambitious and forward-looking plan for Valencia. 

The 15,000-acre community — on the drawing board and faced with legal challenges for two decades — will likely become the poster child for carbon neutral projects in the U.S.

Big-name builders — including KB Home, Lennar and Toll Brothers — will offer a range of homes, from entry-level models $400,000 to $1 million-plus at FivePoint Valencia, according to reports. More than 2,000 affordable apartments are also part of the project in Santa Clarita Valley.

Geothermal-heated community pools, recycled sewer water for irrigation

FivePoint Valencia will boast about 21,500 homes, each with solar-panel systems and plug-in chargers in garages. The community — eventually a midsize city with almost 11.5 million square feet of commercial space and seven public schools — will boast numerous out-of-the-box ideas to reach net-zero status.

For example, the community’s pools will use a geothermal heat exchange system, high-tech sewer systems will reuse water for irrigation, and drought-tolerant and low-combustible landscaping will curb water use. The lower-combustible landscaping is critical since Santa Clarita Valley is one of the highest-risk fire regions in the state, according to multiple studies and a lengthy history of wildfires, especially in Stevenson Ranch.

While aggressive and impressive, the effort is far from enough to reach a net-zero master-planned project. So, the company established a methane capture program at a large dairy, installed solar-roof panels in low-income neighborhoods in Los Angeles County, and even purchased the state’s 170-acre Pine Creek Forest, FivePoint CEO Emile Haddad told CNBC.

Valencia — often referred to as Santa Clarita and best-known for the Magic Mountain theme park — has become a much-in-demand destination for decades, especially during the past year with the pandemic.

The city has numerous large employers, including Advanced Bionics, Boston Scientific, Henry Mayo Newhall Hospital and Princess Cruises. Plus, the community is about 45 minutes from downtown Los Angeles, with the option of using the MetroLink commuter train.

For high-end buyers, even multimillion-dollar homes in Carmel are within reach. Randy Andy/Shutterstock

High prices? No problem for many high-end buyers

Huge stock gains on Wall Street and the ability for more homeowners to work from whatever street they want are helping high-end home prices and sales to surge from San Diego to San Francisco.

In many markets in the state, high-end homes are outpacing and often selling for a larger percentage than lower-priced houses.

Three of the nation’s best-selling high-end housing markets were in California during the first quarter, including an 82% increase in the top-priced houses in San Francisco, according to Redfin. Oakland was in second place at 72%, with fourth-place San Jose at 66%.

A tale of two markets

Nationwide, high-end home sales were up 26% during the first quarter compared to a year ago. Mid-priced homes increased 15% for the same period. And high-end home prices surged 14%, while mid-priced homes increased a more modest 10% for the same period.

“So far, the economic recovery from the pandemic has disproportionately benefited Americans with bigger bank accounts,” says Redfin chief economist Daryl Fairweather. “This means a lot of the demand for homes is coming from folks who are well-off, while many lower-income Americans sit on the sidelines because they have been priced out of the market due to surging prices.”

Fairweather adds that the Bay Area’s big price and sales gains for high-end homes are likely because homebuyers “may be starting to feel more comfortable putting down roots in major hubs now that they’re gaining clarity on post-pandemic life.”

Indeed, apartment rents and home prices dropped during the first few months of the Covid pandemic and the subsequent lockdown, with some residents opting to move to lower-priced housing markets such as the Sacramento region. But consumers may be finding some bargains in the Bay Area — albeit at $2 million or more — or learning that life in the suburbs isn’t necessarily such a great fit. 

Prices for high-end homes — considered the top 65% to 95% of the market — increased 18% to $1.05 million in San Diego during the first quarter compared to a year ago, the largest percentage gain in the state. And those homes in the $1 million-plus range are selling in nine days, just a day more than affordable and mid-priced homes.

It’s a similar story throughout California, from Anaheim to San Francisco. The biggest challenge remains the critical shortage of homes on the market, which will likely not change anytime soon, real estate experts say.

High-end home sales, price increases compared to a year ago  
  • Anaheim: 55%; 14% to $1.2 million
  • Los Angeles: 64%; 11% to $1.17 million
  • Oakland: 72%; 16% to $1.4 million
  • Riverside: 40% 16% to $599,000
  • Sacramento: 47%; 13% to $675,000
  • San Diego: 39%; 18% to $1.05 million 
  • San Francisco: 82%; 5% to $2.16 million
  • San Jose: 66%; 10% to $2 million
California has one of the highest homeowner equity rates in the U.S. BonandBon/Adobe Stock

Home equity soars, again

Need something to break the ice at the family get-together, the first day back at the office or the next Zoom meeting?

Here you go: The average California homeowner earned almost as much in equity during the past year than the average annual household received in  income in the state.

Home equity increased $69,600 during the first quarter compared to the same three-month period in 2020, according to industry tracker CoreLogic. The equity growth is just shy of the household income of $75,235.

For families that own a house, that’s a hefty $145,000 payday for the past year. Not bad during a Covid pandemic that prompted a recession.

California’s home-equity gain is the second-largest increase in the nation, behind only Idaho at $70,900.

All of that equity continues to decrease the number of homeowners dealing with an underwater mortgage. Only 1.1% of homeowners in the state — and a record-low 0.7% in San Francisco and 0.8% in Los Angeles — owe more on a mortgage than the estimated value of their home.

Of course, in order to enjoy all that equity, homeowners would need to sell their home. And, if they are buying another home, the equity is nice but with record-setting prices many would likely still need to get a mortgage. It’s basically sell high, buy high.

Of course, if you are moving to a lower-priced housing market — like Arizona, Idaho, Nevada or Texas or a cheaper part of the state such as teh Central Valley or Northern California — the equity can greatly help lower your housing costs.

Rendering courtesy of Capital Area Development Authority.

Excess state property to become affordable housing in downtown Sacramento

A 58-apartment community in downtown Sacramento is the first of an aggressive effort to build affordable housing on state-owned property, addressing the hard-to-ignore need for more rentals for low-income residents.

Capital Area Development Authority (CADA) is the developer of Sonrisa, the first project to start construction under Governor Gavin Newsom’s executive order that prioritizes affordable housing on excess state property using sustainable, innovative and cost-effective construction methods.

Sonrisa, located at 1322 O Street just a few blocks from the state Capitol, will be an all-affordable apartment community able to accommodate residents with disabilities and powered by on-site renewable energy, dramatically reducing utility bills for residents. The ground-floor will include commercial space.  

Sonrisa proves “government can remove one of the barriers to creating affordable homes, which is access to inexpensive land located close to basic necessities,” says Gustavo Velasquez, director of the California Housing and Community Development. “Here, the state provided this underutilized lot to make life better for people who are priced out of the rental market.”

The state has 11 excess sites under development, and four more are in the early stages of finding developers — in Atascadero, Gilroy, Montebello and another in Sacramento. The state-owned sites, including an armory and former warehouse building, could provide housing for more than 1,300 families, Velasquez said. 

Housing and Community Development provided almost half of the funds for the $20.4 million Sonrisa development. The state agency also approved almost $2 million for the Sacramento Regional Transit District for upgrades at two nearby light-rail stations. 

Additional funding for the Sonrisa development came from CADA; the California Housing Finance Agency (CalHFA); California Tax Credit Allocation Committee; California Debt Limit Allocation Committee; WNC & Associates; and JPMorgan Chase Bank.

Apartments are reserved for residents earning 40% to 60% of the area median income. Rents will range from $605 to $907.

Sonrisa should open in late 2022 or early 2023, according to CADA.

Jose Luis Stephens/Shutterstock

LGBTQ homeowners tend to buy older, smaller homes in cities

LGBTQ homebuyers often buy lower-priced, older and smaller homes compared to non-LGBTQ owners, according to a just-released report from the National Association of Realtors.

LGBTQ buyers’ homes are about 170 square feet less (think one less bedroom) and 15 years older — and they plan to remain for about 10 years, five less than non-LGBTQ owners.

They are also more likely to buy in urban areas and to own a townhome, probably the reason for older and smaller homes. About two of every five LGBTQ buyers are married, and 22% are single men and 15% are single women, basically following those of non-LGBTQ owners.

“Understanding how buyers navigate the housing market is essential,” says Jessica Lautz, vice president of demographics and behavioral insights for NAR. “This report details the impact of the housing affordability challenges on LGBTQ buyers, who typically had lower household incomes and were more likely to be purchasing more affordable homes.”

NAR first added a question about sexual orientation as part of its annual home buyers and sellers study in 2015. Additional findings are available from the NAR study.

Ron Trujillo

Ron Trujillo

Longtime business journalist-turned-communications executive who enjoys reporting on residential real estate in his spare time.