It’s such a great time to build a home that companies are building in oil fields. Nary an eyelash was batted last month when two of the housing market’s biggest homebuilders – Pennsylvania-based Toll Brothers and Florida-headquartered Lennar –acquired 173 acres of land in Montebello, California from Sentinel Peak Resources, a company that owns oil development land up and down the Golden State.
In a project the companies have dubbed “Metro Heights,” 1,200 homes are planned in Montebello Hills, which is 10 miles east of downtown Los Angeles and has pumped out oil since 1917. A new twist on an old, controversial project, the land is already permitted, and the companies are shopping for homebuyers.
Metro Heights website allows, “There will be some active oil wells outside the residential area.” But it assures, “No homes will be built on abandoned oil wells.”
Metro Heights is part of a U.S. home building market that is “utterly bizarre,” said Tim Costello, CEO of Bdx Inc., a listing website for new homes.
“I can’t ever remember a housing market that is remotely like this,” Costello said.
What “this” is are factors that, on their own, are extraordinary. Record-high demand partly fueled by historically low interest rates on mortgages. Low supply and public officials acknowledging the supply crunch. A shortage in materials that makes lumber prices a surprise national obsession. White collar workers on year two of telecommuting and looking for space.
The moment means homebuilders move in several directions at once and can seem like they are throwing paint at a non-wooden wall. But make no mistake – if you’re an established homebuilder, this is a roaring time.
“Simply put,” said Douglas Yearly, CEO of Toll Brothers on an earnings call earlier this year. “This is our time.”
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