Growing Demand Sparks Construction of Single-family Homes

By Jennifer Huffman, Napa Valley Register

After years of little single-family home construction in Napa, pent-up demand is now driving a number of new projects, including homes that sell for more than $1 million.

The Castle Companies of San Ramon, which built Sheveland Ranch starting in 2003, has submitted a tentative map for 12 single-family homes on West Pueblo Drive and Morlan Drive in west Napa. The project is called Pueblo Ranch Estates.

Presidio Residential Capital in San Diego and Lafferty Communities of San Ramon have been approved to build a collection of 18 more expensive luxury homes on Orchard Avenue in northwest Napa called Brioso.

Napa does not have enough housing, said Paul Lucatuorto, co-principal at Presidio Residential Capital. “We have positive economic growth, unemployment is shrinking and home prices have been steadily increasing since 2011,” he said. “We see rising sales prices and limited supply.”

His research shows that about 1,000 new residents move to Napa County annually, but fewer than 200 building permits are issued each year, he said.

North Bay Association of Realtors Napa branch president Kris Chun said that the demand for housing is due in part to lack of new homes. Today, there is less than two months’ worth of housing inventory on the market. A typical market usually features about four months’ worth of inventory, he said.

New home projects indicate a healthy real estate market, Chun said. “Builders realize they can make money on houses in Napa,” he said.

The 12 homes at Pueblo Ranch Estates will sell for an average of about $600,000, said Steve Garrett, a partner at the Castle Companies. The size will range from 2,200 square feet to 2,900 square feet, with three to five bedrooms, he said. He hopes to start construction by next summer and be done by spring 2017.

The days of building hundreds of new homes in one space in Napa seem to be over, Garrett said. “There’s not a lot of large developable projects in Napa anymore.”

His company has previously built homes on Big Ranch Road and Terrace Drive.

Sheveland Ranch got caught up in the housing market collapse of the mid-2000s. While the first 90 homes sold out, the downturn hit and the project was closed for about a year, he said.

“During that time, we retooled, came up with a more affordable floor plan,” built about 50 homes and rented them instead of selling.

It was not their first choice, but the work paid off, he said. The company has since sold the rental homes and the accompanying apartment complex.

In north Napa, the Brioso project by Presidio Residential Capital and Lafferty Communities will offer luxury homes for around $1 million.

His firm and Lafferty Communities will break ground this winter on seven acres on Orchard Avenue near Solano Avenue. Home prices will range from $950,000 to $1.3 million. The total cost of the project will be about $17 million, and the retail value will exceed $21.8 million, said a news release. A grand opening is scheduled for summer 2016.

Brioso will offer several different home plans on lots with a median size of 13,466 square feet. The single-story homes will have private wine tasting rooms, vaulted ceilings and spa-style master bathrooms. Home sizes will range from 2,600 to 4,500 square feet.

The company said it chose that spot to invest in because of “Location, location, location,” Lucatuorto said.

“This particular location has great views of the Mayacamas hills and backs up to vineyards. It seemed like a good combination of residential plus the vineyards and hills.”

Lucatuorto admitted that shoppers for the million-dollar homes are likely not first-time buyers or young families. He expects buyers to be older workers still commuting but who don’t want to live closer to urban areas, people who telecommute or the recently retired.

“Napa is such an iconic area, it’s got such a rural feel to it yet it’s still within a reasonable distance to the cultural advantages of the Bay Area,” he said.

Not all of Presidio’s building projects in other cities are luxury homes, he said. However, “In Napa it’s very difficult to buy land, develop it and sell a home for less than $1 million, especially with the large lots.” Lots at this parcel are zoned to be at least 10,000 square feet.

According to the National Association of Home Builders, the one-year local impacts of building 30 single-family homes in a typical metro area include $6.3 million in local income, $600,000 in taxes and other revenue for local governments, and 96 local jobs.

Single-family homes priced starting at $600,000 are daunting for many buyers, especially first-time home buyers, said Chun. To qualify for a loan to buy a $600,000 home, buyers would typically have to make at least $120,000 a year.

Earlier this year, Lafferty Communities began building 17 new homes at Riva Reserve, off Big Ranch Road in north Napa, where prices start at more than $850,000.

Also underway is Harvest Village, a nine-home project by Healthy Buildings Companies of Napa on Capitola Drive in east Napa. The houses will be in mid-to-high $700,000 range, with three to four bedrooms and 1,800 to 2,200 square feet.

See original article at Napa Valley Register