With Economy Strong, Napa Builders Begin Housing Projects

September 28, 2015 10:05 pm

By Jennifer Huffman, Napa Valley Register

After years in the doldrums, Napa’s new housing market is springing to life.

There is a pent-up demand for housing now that the Great Recession is a fading memory and people no longer have to put off buying or upgrading, industry observers say.

Over the past month, three apartment projects, totaling 114 units, and three single-family home projects totaling 36 new houses have been wending their way through City Hall.

Two of the new apartment developments will be located on opposite sides of First Street near the Napa Premium Outlets, with the third on Brown Street.

The new homes are scattered around Napa in infill locations.

Those numbers don’t include an additional 489 apartments being planned by the Gasser Foundation for Tulocay Village on Soscol Avenue, plus assorted other development plans, some of which have been on the books for years.

“There are a lot of projects in the queue,” said Rick Tooker, the city’s community development director. The economic recovery is underway, and the residential market is trying to catch up, he said.

The uptick in housing projects is “showing recovery from 2008. It’s showing hope,” said Tooker, who noted that Napa’s vacancy rate is under 2 percent, which is considered very tight.

“The economy is rebounding,” Bob Connors, business development manager of the Solano-Napa Builders Exchange, said. “I have a feeling a lot of people postponed construction while the economy wasn’t doing well, now there is more money out there to play catch-up.”

Connors said that the exchange, which merged with the Sacramento Regional Builders Exchange, has seen an increase in commercial jobs submitted for bidding. The nonprofit typically doesn’t work with residential projects, which are usually bid by personal referrals, he said.

This May and June, 22 Napa County jobs were submitted for bid, compared to 15 for the same two months in 2014 and 2013, statistics show.

Lafferty Communities is building 17 new homes at what they are calling Riva Reserve, off Big Ranch Road in Napa.

“Optimism in the real estate market is very good,” said Realtor Mario Tamo, of W Real Estate, who is helping sell the Riva Reserve homes. “The market is very good and supply is very low. Something everyone needs is more inventory.”

Tamo said the luxury homes will all be built at the same time, not in phases. Sizes range from 1,758 to 3,314 square feet, and prices currently range from $858,430 to $1,012,765.

Interest is strong, Tamo said. “Normally it’s fairly difficult to sell houses without a model,” she said. “We don’t have a model. But we’ve been able to sell over half (of the homes) before we started framing.”

The first home will be complete in August, he said, and “all 17 are being framed as we speak.”

Tamo said about half of the current buyers come from the Napa area. There are some retirees and younger couples with children. A handful of buyers are from Southern California, he said.

“Building in general is ramping back up,” said Tamo. “People are getting interested in doing projects because of lack of supply. Everyone realizes inventory is low.”

Unlike during the recession, when both home sales and financing plunged, projects are once again financially feasible for the builders. “For a while, there was no benefit for the developer. Everything was so depressed,” Tamo said.

The Healthy Buildings Companies of Napa is the developer of two local housing projects: Napa Creek Village and Harvest Village.

Napa Creek Village apartments, located on First Street, west of Highway 29, will feature 48 “green” rental units. Bob Massaro, founder and CEO of the Healthy Buildings Companies, said he hopes to break ground in late fall. The project will feature net zero-energy homes with solar power and hot water, electric vehicle charging, LED lighting and Energy Star appliances.

“The buildings are constructed to be extremely energy efficient,” said Massaro. “The project is put together so that (residents) have no electricity and no natural gas bills.”

Of the 48 units, eight will be rented as affordable housing at rates set by the Napa Housing Authority. Sixteen will be rented at “workforce” housing rates, estimated at $1,600 to $1,900 per month. The remaining 24 will be rented at market rates, ranging from about $2,000 to $2,400 a month.

Harvest Village is a nine-home single family home development on Capitola Drive in east Napa, said Massaro. It will be built as a “pocket neighborhood” where all homes enter off a center green space and parking is on the periphery, on a U-shaped private road.

Two of the homes will have legal “granny,” or second units. The houses will range from three to four bedrooms and 1,800 to 2,200 square feet. Prices will be in the “mid-to-high $700,000 range,” Massaro said. They are likely to be available at the end of 2016. As with his apartment project, the homes will also be net zero energy featuring solar hot water and solar electricity and other green features.

The recent increase in residential construction plans is a market correction, said the builder. “There has not been enough inventory to meet demand.”

“For so long, there was no activity and now with the economy getting stronger, people can start looking at new housing opportunities. The builders see it,” said Massaro. “Frankly, it will take a while before the correction is complete. There is pent-up demand.”

See original article at Napa Valley Register