Tuesday, December 11, 2007

RESIDENTIAL REAL ESTATE: Rivendale Homes Looks for Growth in Dixon

RESIDENTIAL REAL ESTATE: Rivendale Homes Looks for Growth in Dixon
Santa Rosa Builder Attracted to Solano’s High-Wage Jobs, Proximity to Higher-Cost Davis
by William Jason Staff Reporter

NORTH BAY – Santa Rosa-based homebuilder Rivendale Homes is moving forward with plans to build 216 homes on more than 60 acres in the Solano County city of Dixon.

Rivendale’s project, Sandalwood – the largest for the company to date – is one of several proposed residential developments that are expected to add some 1,200 new homes to an undeveloped agricultural area in the southwestern corner of Dixon. Rivendale’s project likely will be the first to reach the public hearing stage, according to a Dixon planning official, and it is currently the largest of the southwest projects with applications on file.

Other homebuilders include Ryder Homes of Walnut Creek and Western Pacific Housing, a division of Ft. Worth, Tex.-based D.R. Horton Inc. (NYSE:DHI).

Sandalwood would be the company’s sixth development in Solano County and its second in Dixon. Rivendale President Chris Peterson said his company is attracted to Solano County because of the growing number of jobs in biotechnology and other industries with highly skilled workers.

“Not only do they have good jobs growth but the jobs they are creating are relatively high-paying, unlike Sonoma County, which tends to create a lot of tourism jobs, which aren’t high-paying,” Mr. Peterson said.

Solano County’s private sector wages edged above those in Sonoma County this year for the first time since at least 2001, according to first quarter estimates from the California Employment Development Department. Solano’s average first-quarter weekly wage increased 32 percent since 2001 to $796, while Sonoma’s rose 17 percent during the same period, reaching $790 this year.

Solano County’s wage growth did not protect it from the affects of the current housing market downturn. The median price of a single family home in Solano County fell to $471,541 in the third quarter of 2007, down 10 percent from the same period a year earlier, according to data from Prudential California Realty. That compares to Sonoma County’s drop of only 1 percent to $581,648 for the same period.

However, values in Dixon – Solano’s northernmost city – remained relatively stable, dropping only 4 percent year-over-year to $437,500. That is roughly on par with the 5 percent drop to $511,000 in Santa Rosa, Sonoma County’ largest new home market.

According to Mr. Peterson, the Dixon market is bolstered by its proximity to the city of Davis, where demand for housing remains high because of a strict growth-control policy and the presence of the University of California. Since the two cities are less than 10 miles apart, potential homebuyers often turn to Dixon if they are priced out of Davis, where the median home sold for $572,000 in the third quarter, according to data provided by Century 21 Trongo & Associates.

“You can go up and down the Central Valley and I don’t think you’re going to find prices any higher than you do in Davis,” Mr. Peterson said. “Davis is one of the reasons why Dixon is so appealing.”

Like other homebuilders, Rivendale has suffered the impacts of the current housing downturn, decreasing in size by about 10 percent to 40 employees and cutting prices by 10 percent across the board at all of its projects.

Mr. Peterson said the company is looking for growth in Dixon because of the city’s “strategic location” between Sacramento and the Bay Area, and its 3 percent per-year growth cap, which will help long-term values by restricting supply. He pointed out that Sacramento, another area where North Bay homebuilders have looked for expansion, did not have a similar cap and is now suffering from a glut of housing.

“Dixon supplies homes for people who work throughout the Bay Area and Northern California, but they do restrict the amount of housing that can be built,” he said.

Construction of roads and infrastructure for Sandalwood could begin late next year, followed by home construction beginning in the spring of 2009. The company will not push back its start date because of the current housing slump, according to Mr. Peterson.

“We don’t think it’s wise not to start a project,” he said. “We may move forward through the build-out of the project depending on market conditions but we will always keep the project going."

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