Sonoma County housing construction accelerating

The state’s 4-year-old drought may still be with us, but an even-longer dry spell for Sonoma County homebuilders appears to be ending.

Sonoma County builders this fall are moving forward with more than 20 projects from Petaluma to Windsor. Together they add up to more than 1,400 units, by far the most new homes on the horizon in years.

“The market’s changed,” said Mark Setterland, chief building official for the city of Santa Rosa. The increased activity is welcome, he said, because “we are so challenged in this area for housing.”

Despite the increased activity, no one is predicting a return to the levels of construction seen before the housing crisis, when for two decades local builders erected an average of 2,500 apartments, condos and homes a year. Nonetheless, after seven years of lackluster results, many in the industry are welcoming what they consider a significant boost in building.

“The turnaround in housing that we’ve all been waiting for is finally here,” said Keith Woods, chief executive officer at the North Coast Builders Exchange, a Santa Rosa trade group.

The Builders Exchange is getting calls each week from contractors seeking workers. The boost in building, Woods said, “is going to create a lot of jobs.”

The increased activity came about mostly because home prices have returned to levels where builders can construct a house and make a profit, those in the industry said.

“It hasn’t made sense to build until recently,” said Randy Waller, broker/owner with?W Real Estate in Santa Rosa, which will market homes for a number of the new projects.

When home prices were depressed for years partly due to a glut of foreclosures, “we had this huge gap where you could buy something for less than you could build it for,” Waller said.

In Santa Rosa and nearby Roseland, builders this fall are moving forward with plans to construct more than 550 units in over a dozen projects located in all four quadrants of the city. In most cases, earth moving already has begun.

The projects include the ?110-unit multifamily Village Station subdivision near Sebastopol Road; the 122 single-family units and 15 triplexes planned at Paseo Vista on Dutton Avenue; the 55-unit single-family Aria Place on San Miguel Avenue; the 35-unit single-family Skyhawk 9 and 10 project near Sunhawk Drive; and the 32-unit single-family Rincon Place near Mission Boulevard and Highway 12.

Rohnert Park has three projects totaling more than 570 units that are expected to be in various stages of construction within the next year, said Mary Grace Pawson, the city’s director of Development Services. They include nearly 400 units for the first phase of the University District project, 100 units for phase one in the Southeast Specific Plan Area and an 84-unit multifamily residential project called the Reserve at Dowdell on Dowdell Avenue.

Windsor has three projects and more than 140 units either underway or expected to begin in 2016. They include the first subdivision approved by the Town Council in many years, Victoria Oaks, which includes 84 single-family units and six duplexes on Hembree Lane, said Community Development Director Ned Thomas.

And Petaluma has building permits issued for more than 170 units, including The Artisan, a 144-unit apartment complex on Maria Drive.

Along with all these projects, property owners are revising two major housing projects that previously had won local government approvals. They include Creekside Village, a project of 140 condominiums and 24 apartments approved in Santa Rosa on Montgomery Avenue near the historic Carrillo Adobe and the 387-unit Bell Village apartments, now renamed Vintage Oaks, along Old Redwood Highway in Windsor.

Homebuilding historically has been a major engine of economic growth in the county. For decades it employed thousands of construction workers and provided significant business for home furnishing, appliance and landscaping companies.

But seven years ago construction slowed to a trickle following a world financial crisis sparked by risky residential lending in the United States. The number of building permits issued in the county for single-family homes from 2008 through 2014 totaled fewer than 2,500, a smaller number than were issued in 1990 alone. As recently as last year, builders pulled permits for fewer than 300 single-family homes.

The slowdown prompted a painful shakeout in the building trades.

In October 2005, the county had 15,100 construction workers, according to the state Employment Development Department. Six years later, in October 2011, that number had declined by nearly 40 percent to 9,100.

Employment since has risen slowly each year. Last month the county had 12,300 construction workers.

During the housing crisis, the upheaval included a steep drop in home values. The median price for a single-family home declined from a record high of $619,000 in August 2005 to a low of $305,000 in February 2009.

The falling prices and poor economy prompted a flood of economically distressed properties to the market. From 2007 to 2013, more than 15,000 county homeowners lost their properties due to foreclosures or short sales.

All those distressed properties provided plenty of low-priced competition for new homebuilders.

Aaron Matz, president of APM Homes, said in 2009 he had great difficulty selling 1,200-square-foot homes for $329,000 off Kawana Springs Road in southeast Santa Rosa.

He recalled the difficulty in order to point out how times have changed. The county median sales price in October stood at $529,275, an increase of 74 percent from the bottom of the market. And near Kawana Springs, the 10-lot Kawana Terrace project is about to offer similar homes to the ones Matz sold, but now they will be priced in the mid- to high $400,000s, according to a project representative.

“The price appreciation makes it worthwhile to build,” Matz said. Of homebuilders, he quipped, “Believe me, they’re not nonprofits.”

During the downturn, most of the new homes built were in what some call “zombie” projects, developments that got underway, were later taken back by a lender and eventually were sold to a new builder, typically at a huge discount. In contrast, the typical development today is one that was ready to go before the downturn but never started because of the drop in values.

“What you’re seeing are properties that were approved before,” said J. Belmont, an agent with RE/MAX Gold in Santa Rosa and a representative for the Kawana Terrace Project.

On Sonoma Highway west of Mission Boulevard, builder Tux Tuxhorn is building 10 homes in a project he has owned for a decade. He is a partner in the development with Walnut Creek-based Ryder Homes.

Tuxhorn acknowledged home values have increased and demand appears strong from a lack of supply. But he said recent green building rules and other regulations have increased the cost of construction.

Also, he said, labor costs have increased due to a shortage of workers, “so you have to be really careful doing a project.”

Lending for projects is somewhat easier to get these days, builders said, but still much harder to obtain than before the downturn.

“That’s the biggest challenge, if you can get it financed,” said Brenda Christopherson, president of Synergy Realty Group.

The Christopherson family, including husband Keith and son Andy, built nearly 6,000 homes in the decades before the downturn as owners of Christopherson Homes. Their year-old company, Synergy Group by Christopherson, in the next year plans to start construction on nearly 50 homes in four projects in Santa Rosa and Cotati.

Among them is the 10-lot Sky Vista project across Highway 12 from the Skyhawk neighborhood in east Santa Rosa. Already built there is a four-bedroom, three-bath home with an unobstructed view to the hills of Annadel State Park. The price: $1.075 million.

Some homes at three of their four projects will feature “mini-suites,” bedrooms with separate baths and their own exterior entrance. Brenda Christopherson said the suites can be put to such use as an in-law unit or to house a “boomerang” adult child returning home.

“What people seem to really want and need is that additional space that’s away from the family,” she said.

In the starter home segment, builders are applying to build more “row houses,” said Setterland, the Santa Rosa building official. The homes are technically single-family with their own lot lines, but they have a gap of just inches between one another. They typically are built in clusters of two to eight units.

Over the next eight years, the county and its eight cities have set a state-monitored goal of approving development plans to build more than 8,500 new housing units here, said Tennis Wick, director of the county’s Permit and Resource Management Department. For perspective, in the past eight years, fewer than 6,000 units were built.

Some of the projects that won approval years ago now may need dramatic overhauls in order to be feasible in today’s market, Wick said. For example, the county’s workforce in the coming years may not see much growth in the number of high-tech workers who can afford homes selling for $500,000 to $600,000.

The challenge, he said, will be to revise subdivisions that were approved for residents “who are no longer a part of our economy.”

You can reach Staff Writer ?Robert Digitale at 521-5285 or robert.digitale@pressdemocrat.com. On Twitter ?@rdigit.