Here’s an affordable housing battle that might be typical of any major city.

Implications: When you have a median housing value of say $ 650,000 and a location where the existing housing stock approximates the median, you have an opportunity to sell attached housing at $ 350,000 to $ 400,000 per copy when the supply is otherwise constrained.

Analysis:

This plan promises attached product at 60 dwelling units per acre.  The location is not what I would call gorgeous – its values include immediate proximity to I-5 and Disneyland. But the older inventory is expensive worn-out single family in many cases and the new product may look attractive in comparison.  Examples of the desirability of in-fill attached product in Southern California are everywhere in other places like say Pasadena. In fact, most every other last tag-end sliver of property in central Orange County has been built-on to prove the maxim.

The high cost of Southern California urban land allows either development of estate product and pricing or attached densities like the subject property.  Now that the average family make-up is only 29 % with children, the attached product makes a lot of sense from a living standpoint.  So the developer has made the proposal and is fighting for council overturn of the planning commission.  Never mind that Lennar and others are pushing the same product a couple of miles down the road next to Anaheim/Angel’s stadium in the face of opposition there for similar reasons, the developer thinks the market will absorb the 1500 unit number.  By the time this developer, Lennar and their compadres, and the others redeveloping the old Tustin Air Base further south get going, the 5 mile radius area will bring 5000 + attached homes to market.  Remember too that Orange County is dominated by the Irvine Ranch land holdings which comprise about 1/3 of the county and are still largely undeveloped just a bit south.

The local housing market has slowed and predictions of the future might include the dire numbers we have all read so much lately.  Affordability is the main issue.  Nevertheless, the land developers here – experienced and financially capable - are making the bet.  They have shown wisdom in their investments in the past and they believe they’ve got it right this time.  They’ll be on line in 2009 for the most part.

It’ll be interesting to see if the future market supports the premise.