The most anticipated new housing community in the Sacramento region goes “vertical” next week south of Highway 50 in Folsom with the construction of model homes, followed by homes for sale.
Early buyers could be living on the oak-studded hillside by the end of the year, builders say.
The project site is massive at 3,300 acres, just south of the freeway and north of White Rock Road, between Prairie City Road and the El Dorado County line. It will contain nearly 11,000 homes and apartments, three public schools, two fire stations, a police station and 82 acres of office and commercial buildings.
Folsom Mayor Steve Miklos, serving his last term on the council, says he stuck around partly just to see this day.
“We took our time and did something very unique,” he said.
The community ultimately will house 25,000 residents, enlarging the city of Folsom by one-third. It will bring new home-buying opportunities, but also growth pains.
Here’s an early look at what the project means for home buyers, east county residents and Highway 50 commuters.
How much will homes cost?
Folsom has built a reputation as a desirable place to live. New homes are in short supply in the region. The result: Buyers will pay a premium to live in the new community, which is divided into Folsom Ranch and Russell Ranch.
The price range is wide, with some of the first homes for sale this year in the high $400,000s to $600,000s. By comparison, the median price for a new home sold in February in Sacramento County was $419,000. And the median for a resale home was $330,000.
Taylor Morrison home builder division chief Aren Bazzocco said his company will begin selling homes the first week of June. He said he feels like a pioneer but expects his company’s houses to sell well. Taylor Morrison has 1,000 people on its interest list for 206 homes. Square footage is roughly between 1,800 and 3,100, and prices start in the high $400,000s.
Lennar Homes, the other initial builder, will offer slightly larger homes, 2,200 to 3,700 square feet, starting in the $600,000s.
The New Home Company officials say they plan to build up the hill next spring with homes ranging from the $400,000s to $800,000s but with some larger-lot homes with grander views that could top $1 million.
Folsom real estate has been hot. The average sales price is up nearly 12 percent this year, at $587,000, according to an analysis by real estate appraiser Ryan Lundquist. But Lundquist said builders must be careful not to overprice their homes. Buyers are savvy enough to study the local market and know when the asking price is too high.
Who will buy?
The first houses are being pitched at move-up buyers who own smaller homes elsewhere, first-time buyers who have a big enough down payment and people moving in from outside the area.
Bazzocco of Taylor Morrison said about half the people on his interest list live in the Folsom area. Another 30 percent are Bay Area emigres wanting to flee exorbitant housing costs. The rest live around the Sacramento region.
Local housing analyst Greg Paquin said the project will tap into what he calls the “boomerang” buyers — people who grew up in or near Folsom and have been looking for their chance to move back as adults. Notably, he and others say, a quarter or more of buyers likely will be from the millennial generation, ages 22 to 37, who are now surging into the home-buying market.
Folsom officials say the new south of 50 area will have 1.3 jobs per house, allowing more people to live and work in the community. But even if the city achieves that goal, it falls short of the 2-1 ratio needed for a true balance, according to a Sacramento Area Council of Governments metric.
That means some new residents will commute elsewhere for work, adding to Highway 50 congestion, as well as putting more commuters on back roads in east Sacramento County, mainly White Rock and Grant Line roads.
In preparation, White Rock and Grant Line will be widened to four lanes from El Dorado County to Elk Grove. That work has already started and will advance incrementally as the east county population grows.
Two new Highway 50 interchanges are planned. The first is likely to be at Empire Ranch Road, on the county line, tentatively set for 2023.
Another, Oak Avenue Parkway, is expected to be built between the Prairie City and Scott Road interchanges.
State highway officials, in conjunction with Sacramento Regional Transit, recently won $110 million in state gas tax funds this month to extend the Highway 50 carpool lanes from Watt Avenue into downtown. Some funds also will expand evening light-rail service to Folsom and add express trains during commute hours.
Folsom water and traffic worries
Folsom residents dealt with severe water rationing during the most recent drought, and growth critics have questioned how the city of 77,000 can add 25,000 residents without increasing its water supply or risking deep water cuts during the next drought.
City officials, however, say the city has enough water in normal rainfall years to cover new development south of 50, thanks in part to a series of efficiency upgrades. In drought years, the city will rely on agreements with other water agencies to obtain water, officials say.
Traffic on local streets is another concern. Folsom Boulevard and other city streets already are overrun with traffic.
City Councilman Roger Gaylord said he wants the city to focus on dealing with current congestion before new cars begin flooding the freeway from the new development area.
Effect on housing crisis
Opinions are mixed on whether the new south-of-50 housing will make a dent in the Sacramento area's housing crisis.
The region has seen an increase of only 22,000 homes in the last five years, a mere third of the estimated 64,000 needed to accommodate the region's population and job growth, according to a recent Sacramento Area Council of Governments analysis.
That has pushed up home prices and fed some of the sharpest rent increases in the nation.
Though the new Folsom area is expected to include apartments, city officials say they have not yet received any building applications for apartments.
City officials said builders will build at a slow to moderate pace in the new area, likely constructing no more than 300 homes annually. It will take a couple of decades to fully build out. Paquin said builders, faced with labor shortages and high development costs, are moving cautiously.
North State Building Industry Association head Michael Strech said housing construction in Folsom, Roseville, Elk Grove, Natomas and elsewhere does chip away at the problem, though not fast enough.
"It took a long time to get into a supply-side crisis," Strech said. "There is no silver bullet. We have to build a variety of product in a variety of locations, and that has to happen over many years."