Desert-living demand grows: Dormant residential development kickstarted in Desert Hot Springs

A long-dormant residential development in Desert Hot Springs is getting kickstarted again with a home builder committed to nearly 200 lots in the coming years, as demand to live in the desert grows.

Skyborne is a master-planned community located on the west side of Desert Hot Springs off Pierson Boulevard just east of Highway 62. The area saw fewer than 10% of more than 2,000 permitted homes built by home builder D.R. Horton before the Great Recession, which put a halt to such new housing activity across the country.

Now Lennar, a well-known national home builder, has finalized a deal with developer Skyborne Ventures to take on 187 finished lots in one of 10 villages located at Skyborne.

Jim Kozak of Skyborne Ventures, which bought the site in 2008, said last year saw a sell-out of 29 new homes in another area of Skyborne that were built by another home builder, Gallery Homes. Around 60% of buyers were already living in the desert, while the rest came from elsewhere in California.

“People that have been locked down in apartment complexes really felt the need to have a backyard, somewhere where the kids would play,” Kozak said. “We saw a big demand from people wanting to have their own place.”

The deal with Lennar, a well-known and publicly traded home construction company, was finalized in December. Lennar will first focus on building and selling 79 homes, and will build out the rest of the lots at a later phase.

The homes will be single-story, three- to four-bedroom properties ranging from around 1,500 to 2,090 square feet on large lots, with resort-like amenities such as pools and cabanas in each village. Construction is expected to begin in early 2021 with model homes available by the third quarter of 2021.

Prices aren’t yet available, but the previous round of homes from Gallery were priced in the low to mid $300,000s.

Mayor Scott Matas told The Desert Sun that he wants to see the city become more attractive to working families as the area grows jobs — and that developments like Skyborne will help.

“I couldn’t have been more thrilled to be notified by Jim (Kozak) that they were looking at this deal with Lennar, for one of the largest builders in America to come to Desert Hot Springs and continue this project,” he said. “I’m sure they’re going to go like hot cakes.”

He said the cannabis industry has brought around 2,300 new jobs to the area in the past five years, which has increased demand for homes. Some companies are interested in developing a home-buyer incentive program, Matas said, but that means more housing inventory will be needed.

Affordable housing demand grows in desert

Kozak said part of the interest in developing homes in Desert Hot Springs stems from how the city has steered out of bankruptcy, grown its local economy and earned strong bond ratings — the city has even held onto its strong fiscal status during the ongoing coronavirus pandemic and didn’t make the same cuts seen in other municipalities.

“It’s a real success story that not many cities can share,” he said. “Desert Hot Springs is a rising star in the valley.”

For residents, the city is one of the more affordable places to buy a home inthe state of California.

Homes in Desert Hot Springs were going for a median price of $275,000 in November, an increase of 19.2% from a year ago. The city is still a majority of renters, with around 57% of households renting, according to data from the Southern California Association of Governments.

By comparison, the California Association of Realtors found just 28% of households across the state could afford a median-priced home at $693,000 in the third quarter of 2020.

Additionally, some buyers in the city of Desert Hot Springs could qualify for zero-down financing under U.S. Department of Agriculture programs meant for rural home-buying, pending they meet certain credit ratings and other requirements.

However, Desert Hot Springs home prices continue to rise: Homes have gone up 189% from 2000 to 2018, SCAG data shows.

Torres said when Lennar is building homes in places for working-class families, they focus on an “everything’s included” plan that limits custom options in favor of fewer choices for finishings and materials. This allows the company to buy in bulk, lowering their price and keeping the cost down for the buyer.

“We do a lot of research up front to determine what customers want, the new details and specifications,” he said. “There’s a lot of waste that happens during an options program.”

Lennar has made multiple bets on the desert. The company completed more than 2,2000 homes in the Inland Empire in 2020, Torres said. This year, Lennar is planning to work on three communities in north Indio and three in Palm Desert at University Park in addition to Skyborne, Torres added.

Previously, the company worked on luxury housing at Griffin Ranch in La Quinta. But Torres said Lennar has eyed how the market has grown beyond the demand for million-dollar homes or vacation spots, and that it sees an opportunity to build more affordable developments.

“We really wanted to go in and take a bigger position in the desert,” Torres said. “It seems like the time is ripe for an affordable product, and not just a luxury product.”

Melissa Daniels covers economic development, hospitality and local business in the Coachella Valley. She can be reached at (760)-567-8458, melissa.daniels@desertsun.com, or on Twitter @melissamdaniels.