IRVINE, CA—MBK Homes expects single-family starts to increase slightly and apartment starts to slow this year, while maintaining an overall balance with demand, the firm's president Craig Jones tells GlobeSt.com. MBK is a developer of for-sale single-family attached and detached homes and a developer and operator of apartment communities throughout California.
Jones leads his team in both the homebuilding and apartment building arenas. His focus is on expanding the reach of the company's geography and product offerings as well as maintaining the company's position as a vertically integrated home and apartment builder. We spoke with him about Southern California housing trends and the major events expected to shape this sector in 2018.
GlobeSt.com: What is the outlook for Southern California housing?
Jones: We're at a point in the cycle when the outlook is really colored by submarket and product, specifically supply and demand. Of course, economic growth is the main driver of regional demand, and most forecasts point to moderate growth. At the moment, new supply is more constrained on the homebuilding side of the business, especially in infill urban locations where our strategy is focused. On the apartment side, new supply has been significant, especially in certain submarkets, and will likely crest in 2018, moderating rent growth. Fundamentally, demographics and population growth continue to support long-term housing demand in a supply-constrained region.
GlobeSt.com: What are the major events expected to shape Southern California housing in 2018?
Jones: Interest rates, the new tax bill and the general availability of debt will be interesting trends to watch. We're also monitoring labor shortages and the associated impacts to the real estate business, especially related to delays in delivering new homes/units to the market.
We believe strongly in the long-term viability of the Southern California real estate market. Short-term impacts to homebuilding demand can stimulate rental demand (such as interest rate movement), and vice versa. Interest-rate growth in 2018 would likely be gradual and would signal continued economic growth, which is supportive of our business.
GlobeSt.com: What can you tell us about market and design trends in Southern California?
Jones: We expect single-family starts to increase slightly and apartment starts to slow in 2018, while maintaining an overall balance with demand. Single-family infill communities that cater to an emerging Millennial home buyer, including substantive smart-home technology and lifestyle design, will outperform. Suburban secondary markets, such as the Inland Empire, will catch the eye of more apartment investors.
GlobeSt.com: How many units do you expect to build this year on both the for-sale and rental side?
Jones: MBK Homes is growing and diversifying. We'll build and deliver nearly 200 single-family homes and 500 apartments in 2018, with an increasing focus on apartment investment outside of Southern California.
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Carrie Rossenfeld
Carrie Rossenfeld is a reporter for the San Diego and Orange County markets on GlobeSt.com and a contributor to Real Estate Forum. She was a trade-magazine and newsletter editor in New York City before moving to Southern California to become a freelance writer and editor for magazines, books and websites. Rossenfeld has written extensively on topics including commercial real estate, running a medical practice, intellectual-property licensing and giftware. She has edited books about profiting from real estate and has ghostwritten a book about starting a home-based business.
