In an area with low housing supply and soaring home prices, local first-time buyers are trying to find affordable options. A San Ramon-based company is placing its bets that townhomes are the solution.
The homebuilding business, Homes Built for America, is expecting to complete construction of a Sunnyvale townhome project in 2025. The first phase of the project is set to add 50 townhomes near the Sunnyarts neighborhood by April. The second phase of the project will build 35 more townhomes down the street – at the site of the former Longhorn Charcoal Pit restaurant, which closed in 2021 after 61 years of business. Construction of the second phase will begin in about six months.
“We really focus on first time-buyer communities,” said Scott Menard, president and chief operating officer of Homes Built for America. “All of our stuff in the Bay Area right now are townhomes because we just believe that’s the affordable price point, or the attainable price point for a lot of those up and coming millennials.”
Typically you will see first-time buyers, young people and those with small families moving into townhomes, according to Jeff Bell, managing-broker of Coldwell Banker Realty, and a past chair of the Silicon Valley Association of Realtors.
In Santa Clara County, the median sold price of existing single-family homes in June was more than $1.9 million, according to data from the California Association of Realtors. The same data showed the median sold price for existing condos and townhomes was about $1 million.
“Obviously, there is a high demand, lack of supply in the Bay Area at large,” Menard said.
Sunnyvale is on the hook to add 11,966 housing units between 2023 and 2031 to meet housing needs mandated by the state.
“When we’re looking at developments – what type of developments are being built, it is definitely the higher-density housing,” Bell said. “We’re seeing very, very few single-family homes being built.”
Menard said the Sunnyvale townhome project, named Vida, has been in the works since 2017. It took the company five years to secure entitlement for the 50-townhome development at 176 E. Fremont Ave., which is significantly longer than the time entitlement takes other cities, Menard said.
Bell said the townhome market took a hit after Covid, when people were confined to their homes and began wanting more space. Some of the Vida townhomes have already sold, with people beginning to move in starting in August, Menard said.
Menard said the project is funded by a construction loan through New York-based Madison Realty Capital. Interest rates are very expensive right now on construction loans, he said.
“It’s very expensive and difficult to build here,” Menard said.
Bell said not only are townhomes more affordable for buyers, they are also more affordable from a builder standpoint, since you can sell more units on the same amount of land.
Homes Built for America recently held a grand opening for two housing projects in Hayward, creating a total of 244 townhomes.
