I recall a conversation I had, in August 2005, with the head of a local commercial real estate brokerage who claimed to me that these developers (speculators) who were paying $100,000 to $150,000 per acre for land (to build homes)were going to make out "big time" on this boom.
He claimed that "we had another 7-10 years more of this boom, before things leveled off." Turns out this guy was nothing more than a slick talking salesman who would say anything to make a commission.
Now the tide is going out and we get to see who is swimming naked.
From the Bakersfield Californian BY GRETCHEN WENNER:
A major housing development southwest of Bakersfield is dead, a victim of the wheezing housing market.
The Flying Seven Ranch was slated to put more than 9,000 homes and apartments south of Panama Lane on four square miles of farmland owned by the Destefani family. Flying Seven developers now say their project is kaput because of drooping demand.
That project's demise may also impact plans for the Gateway project of nearly 16,500 more units immediately to the south of Flying Seven. A gap created by Flying Seven's pullout could hobble Gateway's plans for annexation into Bakersfield.
"Things were going great guns," said Marc Gauthier, the city's principal planner, "then got slammed into neutral."
The following month, developers of the McAllister Ranch project on the north side of Panama Lane got a two-year extension for 274 homes on a 582-acre patch there.
The 6,000-home McAllister Ranch community is moving ahead, though at a slower pace than developer SunCal Cos. predicted two years ago. Then, it said residents might move in at the end of 2006. SunCal took over the long-dormant project in April 2005 after previous developers dropped out in 1993.
These days, a golf course designed by Greg Norman boasts tidy greens, but the rest of the 2,070-acre project rises not much higher than the curb-and-gutter stage.
Fresno Bee (hat tip Lander).
“A real estate mystery lingers in southeast Fresno: Why would a developer build two dozen houses, sell only two and then disappear?”
“Few cars visit this ghost tract south of Butler Avenue, known as Ashwood Park. Weeds choke many lots. The model home complex is closed. There are no real estate signs in the yards, and no phone numbers posted anywhere. Just placards in the windows that read ‘available.’”
“‘It’s very quiet and peaceful,’ said Pao Ly, one of two home buyers who moved in before the developer, Lafferty Homes of San Ramon, vanished in March. He suspects the surrounding houses eventually will sell for less than the $450,000 he paid for his 2,900-square-foot home, and would like to renegotiate the deal — if he can figure out who to call.”
“Experts say the developer likely turned the tract over to lenders because it couldn’t sell houses fast enough to cover debt payments — much as some troubled home buyers walk away from a house they cannot afford and cannot sell.”
“‘The odds are that there was a large loan on the land and the builder could not afford to carry the land,’ said Alan Nevin, economist for the California Building Industry Association.”
“Lafferty Homes may have priced the houses too high for the area, some real estate observers said.”