Housing construction accelerates in Sonoma County

For at least a decade the tract housing subdivision sat uncompleted in west Santa Rosa - a repossessed field with a looped, asphalt road and most of the sidewalks installed.

But this spring foundations and framed walls arose from the ground along Sebastopol Road near the Courtside Village neighborhood. Plans there call for the construction of 51 single-family homes and 16 attached units.

“We plan to build all 67 just as fast as we can,” said Richard Lafferty, president and CEO of Lafferty Communities, a San Ramon-based homebuilding company. The project is one of the few remaining that sat for years after the original developers gave properties back to banks in the midst of a historic housing market crash.

Like the as-yet-unbranded subdivision, the Sonoma County new home sector is showing signs of life.

Builders are slowly making a comeback after enduring an unprecedented slowdown in the years following the recession. This year builders have broken ground for new subdivisions from Rohnert Park to Windsor for the first of hundreds of homes that are expected to be built in the next five years.

The home construction season appears on track to be the busiest in at least a decade. That is partly because hundreds of homes are being rebuilt in areas ravaged from last fall’s wildfires.

“The pace has picked up,” said Keith Woods, CEO at North Coast Builders Exchange, a Santa Rosa trade group.

Sonoma County residents shouldn’t be surprised at the renewed activity, Woods maintained. Nor should they surmise that one year of increased building will provide the county an adequate supply of homes.

“We are playing catch-up,” he said, “and there is a huge shortage of housing.”

Both city and county officials are calling for the addition of thousands of housing units in the coming years. Their proposals include high-density housing in downtown Santa Rosa, home projects on surplus government properties and subsidized units aided by a new affordable housing bond for Santa Rosa.

As such, Woods predicted the next five to 10 years “will be one of the busier building eras that we’ve ever had here.”

Skeptics have suggested that various roadblocks nonetheless may limit construction. They point to a lack of progress for years in building transit-?oriented housing in Railroad Square on land owned by the Sonoma-Marin Area Rail Transit agency. Similarly, they note the recent resistance of neighbors to a proposal by developer Bill Gallaher to build 870 housing units on the county’s old hospital complex along Chanate Road in east Santa Rosa.

Hanging over the local housing market is the damage done by the most ?destructive wildfires in state history. The fires of October claimed 24 lives and burned nearly 5,300 homes in the county.

In the past nine months, a new category of buyer has appeared at new housing subdivisions: fire survivor. Among the first places such home seekers went last fall was to a 35-unit development in the Skyhawk neighborhood off Highway 12 in east Santa Rosa.

“Half to three quarters of that subdivision ended up going to people who lost homes in the fire,” said Aaron Matz, president of Santa Rosa-based APM Homes, the project’s builder.

In northwest Santa Rosa, nearly half of those purchasing the first 14 homes at the Fox Hollow subdivision this spring were fire survivors, said Trisha Guido, the development’s marketing manager. Late last month, the first buyers got keys to move into new homes off Fulton Road near Piner High School. The development’s prices start at $585,000.

Fox Hollow, a 143-unit project by Irvine-based developer City Ventures, is one of at least ?10 housing projects that eventually will add over 900 single- and multifamily units to Santa Rosa, according to David Guhin, the city’s planning and economic development director. The developments include a 198-unit townhouse project on an old golf driving range overlooking Highway 12 near Stony Point Road, as well as an 82-unit single-family project that APM homes is building on West Third Street near Imwalle Gardens.

For Lafferty’s project on Sebastopol Road, sales agents and price lists should be available by the end of July.

“We certainly expect there will be reasonable demand given the shortage of houses in Santa Rosa,” Lafferty said.

Projects around the county

Outside Santa Rosa, Rohnert Park has the most housing construction underway, with two major subdivisions offering new homes for sale.

The University District subdivision across from Sonoma State University’s Green Music Center has been selling homes for over two years. Three different building companies there are on track to complete the sale of 300 houses by year’s end, said Kevin Pohlson, vice president of Danville-based Brookfield Residential Northern California, a division of a national home builder.

The subdivision along Rohnert Park Expressway eventually will include 1,236 single-family homes, a 218-unit apartment complex and 100,000 square feet of commercial space. Home prices start in the high $500,000s.

Also in Rohnert Park, the Willowglen subdivision near SOMO Village has 22 new homes occupied and nearly 50 in various stages of construction, said Alexandra Heath Rihl, vice president of sales for Healdsburg-?based Willowglen Homes. The project at Petaluma Hill Road and Valley House Drive is slated to build 400 housing units and a neighborhood commercial center. Prices start at $619,900.

In Windsor, models are nearly complete for the 89-unit Portello subdivision off Hembree Lane. The project, by Turlock-based JKB Living, has prices starting at $669,000 and features seven floor plans.

Home styles and price

Most new homes built in the county today feature two-story designs. But five of the Portello floor plans are single story and most offer a choice of three elevations, including a flat-roofed “modern” design, plus “ranch” and “farm” styles.

“They’ll be quite a varied streetscrape,” said Margaret Olmsted, division manager for Granite Bay-based Advantage Group, which oversees sales.

Both local real estate agents and new subdivision sales officials said the wildfires caused an initial spike in demand and in prices for the local housing market. Fire survivors scrambled to find housing, and the value of home resales hit a record amount for the final two months of the year.

The demand continued into the new year.

At Fox Hollow, said Guido, “we opened mid March and we had hundreds of people showing up.”

But in a sign that the rush since has somewhat subsided, City Ventures in recent months has increased its referral fee to ?3 percent of each sale for outside agents who bring in clients to buy homes at the subdivision.

In the wider market, several brokers this summer are reporting a bump in buyer resistance to listed home prices and an increase in price reductions. What lies ahead remains a matter of debate. Some think prices simply may stay flat for a time before resuming their upward march.

But Randy Waller, broker/owner of W Real Estate in Santa Rosa, is less optimistic. He argued the housing market already has given up much of the roughly 10 percent jump in prices due to the fires.

“We’re going to come back to reality,” said Waller, who for years has specialized in both new subdivisions and home resales.

He emphasized he is predicting a correction to about where home values would be without the fires and not a decline below that level. He acknowledged such a shift has yet to show up in the county’s median single-?family home price, which ended May at a record $692,250, an increase of nearly 11 percent from a year earlier.

But he suggested the median price can be imprecise on such matters. For example, a jump in home sales in pricier neighborhoods can cause the median to rise even if a number of sellers are forced to drop prices to land buyers.

What Waller and others see this summer is an increase in the number of new homes available for sale. And local planning officials say they are working to further build that inventory in the years ahead.

More housing needed

County officials have urged building as many as 30,000 homes in the next five years. For Santa Rosa, Guhin has prepared a chart that the city’s own state-mandated housing goals call for building about 4,500 new units in the five years ending in 2022.

In comparison, data from the state Department of Finance reports the entire county added over 15,000 housing units in the first seven years of the century, or about 2,160 a year. In the next 10 years the county annually averaged only about 980 units.

Guhin acknowledged new approaches are needed to build significantly more homes.

“If we just do as we have been doing it,” he said, “we won’t reach those goals.”

As a result, the City Council is considering a housing bond for the November ballot, a measure that likely would seek to raise between $80 million and $180 million. Also, council members have directed planners to make what Guhin called a “concerted effort” to encourage high-density housing projects in downtown.

For the county, the increase in building activity this season can be measured in jobs. In May, 14,000 workers were employed in the county’s construction sector, the most for any month in over a decade. And according to the state, that count doesn’t include many crew members rebuilding homes in burned neighborhoods, because they are employed by builders and other contracting companies based outside the county.

For the burned neighborhoods, Santa Rosa and the county together had issued more than 640 building permits by Friday. That amounts to about ?12 percent of the lost homes. More than 380 other home applications are under review.

To date construction hasn’t been significantly hampered by a lack of workers, said Woods of the Builders Exchange. Many builders still expect a worker shortage, but it appears to have been postponed because so many fire survivors have struggled with their insurance companies over coverage payments.

Months earlier, Woods had warned county leaders that it could take a decade to replace all the homes lost in the fire. Thus, it was noteworthy when he recently acknowledged surprise that the pace of the rebuild isn’t happening faster.

“It is definitely slower than I anticipated,” he said.

You can reach Staff Writer Robert Digitale at 707-521-5285 or robert.digitale@pressdemocrat.com. On Twitter @rdigit.