Home construction has been dormant for years in Ceres but the industry is expected to start up again in small increments while prices of existing homes continue to rise.
Home inventory is extremely short-supplied in Ceres which means the highest prices ever. As an example, a four-bedroom, three bath home in the Eastgate area of Ceres sold for $200,000 in 2010, or $65 per square foot. It sold again in October 2017 for $399,500. Today the same house could fetch $675,000 to $692,000.
Things have been so slow in Ceres that the Planning Commission has cancelled five of its eight meetings scheduled this year; and cancelled 12 of its 24 meetings in 2021. Throughout the country housing starts have not kept up with the increasing population with COVID-19 and government restrictions having a lot to do with it.
The Wall Street Journal recently reported that supply-chain backlogs are causing massive delays in new home construction across the country and sending prices to record highs. Garage doors became so scarce in Sacramento late last year city officials there began allowing builders to close on homes with temporary enclosure covers.
The housing market research firm Zonda, surveyed home builders in November and 90 percent said supply disruption were affecting them, causing a ripple effect of rescheduling crews already decimated by a shortage of skilled workers.
Costs of building materials have also shot up. In 2021, lumber prices spiked to more than $1,600 per thousand board feet. When COVID hit, lumber mills shuttered or slowed due to workers getting sick and government lockdowns. The industry also scaled back production, thinking demand would slow like other sectors, but new home builds didn’t slow.
The demand for building and not enough supply led to a price spike. At this time last year, the National Association of Homebuilders found it cost over $36,000 more for a new single-family home.
Prices eventually dropped last year, but since November, lumber costs have started rising again, almost back to where it was a year ago.
Things may only get worse. A Feb. 8-28 poll of 33 property analysts suggested U.S. house prices would rise 10.3 percent this year. That was an upgrade from 8 percent in the December poll, suggesting underlying demand for housing is still strong and housing supply is still tight. Prices are forecast to rise 5 percent in 2023 and 4.1 percent in 2024.
“The recent pace of home price increase is clearly unsustainable,” said Brad Hunter, head of independent consultancy Hunter Housing Economics, who expects just under 8 percent house price inflation this year, followed by 4.1 percent in 2023.
Rising interest rates is expected to put a chill on demand for home buying.
“While buyers remain interested and willing to purchase homes, mortgage rates are already moving toward 5 percent and starting to cap their ability to qualify for a loan,” said George Ratiu, senior economist and manager of economic research at Realtor.com.
Ceres hasn’t seen any substantial housing starts in several years. Only 17 permits for new homes were granted last year in the city of Ceres. Only five of them have passed final inspection.
But home construction will begin resuming this year in the 94-acre Whitmore Ranch Specific Plan south of Whitmore Avenue near Cesar Chavez Jr. High School. No homes have yet to be built since its 2019 annexation, however, two subdivision maps have been approved. The first, approved in May 2021 subdivides 19.3 acres into 107 residential lots. The second was approved on March 21. The applicant proposes to subdivide 8.4 acres into 46 residential lots just east of Moore Road and 650 feet south of Whitmore Avenue.
Grading, sewer and water lines and roadway infrastructure for the first subdivision of 107 lots of Whitmore Ranch is expected to start in June. However, the developer still needs to submit the development plan which will be reviewed by the Ceres Planning Commission which will take a look at architectural designs and placement of homes.
Also, homes are expected to be built in the second phase of 38 homes in Cambridge Estates, a 8.26-acre site at 1200 and 1206 Hackett Road. The project site is surrounded with residential uses to the west, south, and east, with Strawberry Fields Park and Sinclear Elementary School to the north.
Also approved and ready for building is Olive Villas, an 18-home subdivision on Hatch Road next to the Olive Wood Professional Park.
There have been no building projects proposed for the West Ceres Annexation area in southwest Ceres nor any activity in the lots approved years ago for Copper Trails and Maple Glen.
Construction is also returning to Keyes. Bright Homes is gearing up to build 64 homes in the 13.2-acre Keyes 19 North subdivision located 4713, 4805 & 4707 Norma Way, between Lucinda Avenue and Norma Way. The subdivision was approved by the Stanislaus County Board of Supervisors in 2016 and extended twice.
Keyes 19 South, located on 6.7 acres west of Washington Road between Norma Way and Nunes Road, will result in 27 single-family homes.
Interest in building homes in Modesto is also taking place. Recently the Modesto City Council decided to move forward with two annexation proposals for more housing in southwest Modesto, with Councilwoman Rosa Escutia-Braaton saying the housing “is the top issue that’s most frequently brought to our attention.”
The council agreed to proceed to amend Modesto’s Urban Area General Plan to designate about 23 acres of the Fairview Village in south Modesto as village residential from its current commercial.
Also the city of Modesto wishes to annex 177.75 acres of land east of Carpenter Road and north of Whitmore Avenue. The property is part of the Fairview Specific Plan first adopted in 1995.
Mike O’Hara, the director of forward planning at Tim Lewis Communities, approached the city about developing about 38 acres into a single-family home subdivision with 217 lots. He hopes that building can start in late 2023.
Like hidden taxes affecting the cost of gasoline at the pumps, fees charged to developers make homes less affordable in California.
According to Christopher Hoem, director of Community Development for the city of Ceres, the permit fees to build a home in Ceres – including all city, county and school district fees – adds $54,000 to the cost of a home.
The state’s requirement to install solar on every new home built in California adds about $10,000 to the cost of a home. The California Energy Commission (CEC), estimates that the solar addition increases the average monthly mortgage payment by $40, but notes that new homeowners will save an average of $80 a month on their heating, cooling and lighting bills.