Monday, August 18, 2008

More trouble for the City in the Hills and Ca home prices crash even more

Construction at two tracts in northeast Bakersfield’s City in the Hills development has been halted by one of the builders there, K. Hovnanian Homes, a company official said.

The Rosemary Arbor and Lantana’s Edge neighborhoods are on hold, said Joseph Manisco, vice president and chief legal officer at the company’s Southern California regional office in Ontario. Manisco said the tracts weren’t profitable.

"What we're looking at is a fire sale of properties in newer affordable neighborhoods that were bought or refinanced near the price peak with lousy mortgages.

The median price paid for a Southland home was $348,000 last month, down 2.0 percent from $355,000 in June and down 31.1 percent from $505,000 for July 2007. That peak of $505,000 was reached in March, April, May and July of last year.

Orange County down 28% YOY

Riverside County down 34.8% YOY

San Bernardino County down 35.2% YOY


Rob Dawg said...

...said Joseph Manisco, vice president and chief legal officer...

If ever there were a run, don't walk signal it is when the chief legal officer talks to the press.

Ooops, too late. Down 10% today. 20% from last week's high.

Anonymous said...

“I’m really surprised this is news,” Manisco said of the halted City in the Hills neighborhoods.

Sounds like THEY've (Hov) known it for a long, long time.

BTW, Hovnanian is on the Ailing/Watch list of the home builder implode-o-meter. That site has an article that features this quote:

"I hate to feel like a vulture, but in every cycle we have typically bought land from other builders that have gone in bankruptcy," Ara Hovnanian, chief executive of Hovnanian Enterprises Inc., said at the Reuters Housing Summit in New York.

Anonymous said...

I have a question about appraisals. Are these done in a subjective or objective manner? Any common computer programs used, written specifically for this purpose. The reason I ask is that our builder just had a home in the development we are buying into fail to appraise at their selling price. Now I understand that they want to bring in another appraiser since they think the bank's appraiser was wrong. Can builders really shop around for appraisers? How much should two appraisers differ in terms of % of price? Would it even matter what the builder's appraiser thinks - I wouldn't think that any bank would just say, "Oh, ok, your guy has a better price. We'll go with that."

Anonymous said...

Anonymous........with regard to your appraisal question. If you are using a mortgage broker or the builders lender this can happen. If you are at one of the larger banks, this would not happen. Banks can ask for a reconsideration, if they feel that there is error, but can not select another appraiser because they did not like the first one. This is the sort of thing that got us into the condition we are now in....prices are falling, even for the builders...

civil-ized said...

Castle & Cooke seem to find people willing to pay $100,000 over current market prices - and why the appraisors side with them is open for your personal judgement - but in Village Green - some people are paying over $160 per square foot while there is a REO house on the same street for $112 a sqaure foot. And it is not selling at that.

If the builder can find a sucker - they will take advantage. If the house you are buying did not appraise, I would think twice about buying it - It is not in your best interest to buy a house for a price that the appraisor cannot justify. The builders have slick sales people who want you to pay $348,000 for a model house even though there is one exactly the same floor plan down the street for $235,000 as an REO.

If I have to list my house for the same price range as the repos in my neighborhood - just to get buyers to look at it, then what does that say about what repos have done to house values? The builder will say that the repo has no bearing on the prices for their new houses, but if the banks look at the 2 houses on the same street with the same sq footage and built in the same year on the same size lot and appraise yours lower than the builder is asking for it, then it means you are paying too much.

And what about your resale down the road? Prices are still dropping. If you over pay a builders price today, in a neighborhood that is being shut down by the builder - selling off models - what will your resale be in a couple years? This is not the time to be getting upside down in a new house. Think of it this way - if the buiders are shuttering their own neighborhoods, why are you investing your hard earned money in it? Just my 2 cents.

Anonymous said...

Are all of the buyers who DO live in City in the Hills still paying HOA fees? Even with no swimming pool, parks, etc?

Anonymous said...

Hell, paying HOA? What pay the mortgage? Those people will be upside down for the life of their loans. That place is destined to be the next ghetto of BK. (the ghetto doesn't have far to go to get there)
I feel for those folks. I feel bad for all those people who bought up in Portola and Venecia. Man, they got sold a bill of goods! The NE was supposed to be the new hot spot of Bako... NOT!

WaitingToBuy said...

It won't be a ghetto....there's no liquor store within walking distance.

On topic though....anon I would drive away from that builder as fast as your leased BMW will allow.

I.E. House Hunter said...

Those YOY totals always seem to shock me.

Anonymous said...

On you can rent a 4,000 sq ft 5 bd, 3 ba in the "tuskney-hills" of bakersfield for the month of November for $2500 or $150 per day. Where are they on building out that development (Tuscany) anyway?

Anonymous said...

A bit off topic...

Hey- I was wondering if some of you guys in "the know" could help me out?
I am looking to buy a house NOW! I need my wife's income to qualify for a loan. (I am waiting on the sheriff's academy in Jan) She is going to have a baby soon so I have to continue to rent or step up and buy NOW. (no income for 4+ months after the baby, then I'll be in the academy and won't have time to house shop)
The plan is to buy a decent home in the low $200's. We'll live there for a year or so and then buy our "real" house in late summer 2009. (when I am out of the academy and we are sure that we are staying in BK) Then we will have a nice rental with a good rate and a new, larger primary res. Make sense?
The trouble is that the market is starting to really drop. I'd rather wait until Nov or so to buy but that means we'll have no income. (not a big deal for us as we have really good reserves and could cash out a home if need be)

I need a bank owned, as short sales will take too long. I would prefer to get some of this "shadow" inventory from the bank. I'd rather buy it "as is" with no appliances, green pool, yellow lawn, etc. (buy it just how they left it) I keep seeing houses on the market the are REO but have new paint, flooring, etc. I'd also rather do it without an agent and save the bank the commission. (I was an agent in another state so I am not worried about doing a transaction between me and the bank)
I am looking for a screaming deal, done FAST!
Should be easy to find in this market right? Well, not so far.
How should I go about this? How to get info on bank owned that are not on the market yet? Anyone have any contacts?
Any help would be great!

(I posted this in another thread but it was so far down I wasn't sure anyone would see it)

Anonymous said...

Also- I was wondering about the auctions. Seems to me that most of the houses i have seen on RealtyTrac have a starting bid that is way more than the house is worth. Those just go back to the bank. Are there any deals to be had at the auction?
Sorry to get off topic. But this is a little bit on topic. We all waited for the bubble, now time to reap the rewards. I am just trying to figure out the best way to do that.

Anonymous said...

MoreLand. ha ha ha

Anonymous said...

guess what? The house 'amazingly' got an appraisal at the sale price. A $20k difference between appraisals for a 1400sf home. Does something smell funny about this or is it just me?

Dave said...

Hey Anon -

Why are you in "need" of a home. I would really encourage you to wait for the "real house" in 2009/2010 and continue to save in the meantime. This foreclosure beast does not show any signs of slowing down, we have not even started the mountain of Alt-A defaults yet. I believe you would only be hurting yourself by buying the temporary home now and then buying one year later. Your temporary home WILL have a lower value one year from now, no question! Enjoy the perks of renting...not loosing your butt! Especially now, the financials decisions that you make will either punish or reward you in the future! Good Luck!

Anonymous said...

Yes, fishy is putting is kindly. Think long and hard about that house. I was just looking at new homes in Capella. Many are in contract but there are bank owned and short sales in the same area for $60,000+ less than the new ones. (plus have window coverings, landscape, etc)
I told the sales lady that the $18,000 bonus that they were offering was a joke.
They were all hype- Gotta buy now before you "loose" the builder kickbacks! Yeah right, they don't give them because they love buyers. They give them because they HAVE to to get their homes sold. Without them they will be forced to LOWER prices. Which is why they seem to be trying to get the pre-rebate homes sold off now, that way they won't have to worry about getting the existing homes that are in contract to appraise after the price reductions. (they won't appraise)

Anonymous said...

Hey Dave, I see your point. I have gone back and forth and still am not 100% sure but a couple things come into play:
1) we hate our current situation. So we would need to move into another rental. We really want a pool and have a 2 year old, so it would need to be fenced. We also have pets. Finding a fenced pool home in NW w/ pets is not easy or cheap.
If I buy a house, I estimate the payment (total- P&I and taxes, ins) would be $1200. The rental on a house like that would be $1800 or more. I can save $6000-$10,000 by buying now and not renting. (There is also the write offs, etc)
2) Buying now I can get better financing. (primary residence) That will save me 2% over buying a second home/investment later. (I want to own rentals)
3) We have a new baby coming and the peace of mind of being in our own home would be nice. I hate renting, just feels like I am in a hotel.

So factoring in the rent savings, savings on the mortgage rate and the write-offs gives me a small cushion against the still dropping market. I'd be wiling to take a small loss on paper for the ability to do what I want to my house. This investment would be a longterm rental so I would not need to see a price increase any time soon. But, I do need to find a great deal to make this a better situation.

Anonymous said...

No thoughts on how to get the best deal right now?
Come on guys!

Anonymous said...

About the appraisal process and incentives. One thing that struck me was that the home in question had $10k in incentives, yet they don't deduct these from the final sales price. Why is that? If you aren't actually going to pay that 10k, then why is it in the sales price. That deduction would also bring it much closer to the appraised value.

Anonymous said...

Interesting comment because I've always wondered why incentives didnt come off sales price. Advantage to seller in price, taxes and property taxes. Guessed that lack of deduction was due as opposed to buyer's credit was to advantage to Real Estate agent in comission. Anyone?