Friday, February 16, 2007

Delavan Circle

I had some extra time on Friday, so I paid a visit to Delavan Circle in Rancho Cordova. Four houses on that street appeared as Flippers In Trouble recently, and I wanted to get a closer look.

Delavan is located on the southernmost edge of Rancho Cordova, east of Sunrise Blvd and south of Douglass, in the Anatolia master planned community. (The area once belonged to Aerojet, and was part of their weapons testing range during the 1960s and 1970s.) Several builders are represented in Anatolia, including Cambridge Homes, D.R. Horton, Lennar, and JTS Communities.

The Anatolia development looked like it was over 80% complete. On my way in I drove by contractors working furiously on both Lennar and Cambridge houses, and there were several spec houses by both builders with "available" signs out front.

As I made my way over to Delavan, I passed by the JTS Communities office, and I realized with a sinking feeling that these four FITs were JTS houses. There were only two cars in the model home parking lot, and the entire JTS side of the development was like a ghost town:

There were over a dozen empty lots, and some poured foundations with no construction activity taking place. The lot signs were sun faded, and the bolts sticking out of the foundations were weathered and rusty:

The four houses on Delavan Circle were empty and looked unlived in. The only hint of human occupancy I noticed was a single set of tire marks on 11890s driveway:

So, how could four houses on one street get into trouble so fast? Agent Bubble was kind enough to dig a little deeper into this mess, and this is what he discovered:

• Three of the four houses were purchased with 100% financing. The fourth put 5% down.
• Option One did loans on three of the houses, one for 95%, one for 100%, and a third 80/20 (both notes).
• The other house was an 80/20 done by American Brokers Conduit (both notes).
• All four are now short sales asking between a 17% and 25% loss.
• All four were initially listed asking between a $75K and $80K profit.
• Only one house is listed as having been lived in at all.

This is a pattern we have been seeing at several JTS developments in the area. Many of you remember Woodhaven Place and the Lincoln Crossing Flipper Massacre. Add another one to the list.

11887 Delavan Cir
Rancho Cordova, CA 95742
Total Loss: $234,500Percent Loss: 25.1%
Asking Price: $699,000
Bedrooms:6 Baths: 4 Sq. feet:5400

Listing History:
Down 36.5% from $1,100,000 On 01-20
Down 12.5% from $799,000 On 01-27

Previous Sales:
Sold on 2006-06-26 for $933,500

MLS# 70005910 Google Maps
Assessed Value Property Tax Bill

11833 Delavan Cir
Rancho Cordova, CA 95742
Total Loss: $219,500Percent Loss: 23.9%
Asking Price: $699,000
Bedrooms:6 Baths: 5 Sq. feet:5160

Listing History:
Down 29.7% from $995,000 On 11-24

Previous Sales:
Sold on 2006-08-25 for $918,500

MLS# 70001764 Google Maps
Assessed Value Property Tax Bill

11890 Delavan Cir
Rancho Cordova, CA 95742
Total Loss: $139,112Percent Loss: 17.3%
Asking Price: $665,888
Bedrooms:5 Baths: 4 Sq. feet:4235

Listing History:
Down 24.3% from $879,990 On 10-14
Down 19.8% from $829,990 On 12-09

Previous Sales:
Sold on 2006-09-14 for $805,000

MLS# 60113334 Google Maps
Assessed Value Property Tax Bill


Sittin' Out This Mess said...


Those JTS subdivisions are real FB killers. If you look at you will see the JTS Estates at Lincoln Crossing is very prominent in that database. Six homes are currently in Notice of Default, facing Foreclosure. Four are on Hillwood Loop, one is on Earlton, and one is on Heartland. The homes were purchased between April and July 2006. These must be first payment defaults to be facing foreclosure so quickly.

The average purchase price (not loan amount, but purchase price) was $684,000. This is the true definition of your FITS, except none of the houses are listed for sale, so they don't register on your FlippersInTrouble web site.

Now, here is where it gets really interesting and stupid. JTS has sold over 10 more homes to new FB's in the LAST 60 DAYS with an average purchase price of $743,000. Hello buyers. If you just wait a few months, the foreclosures will be auctioned off for less than you are paid a month ago. Of course, what’s $59,000/house among new FB's?

And what are these lenders doing? Can't they pull up a foreclosure sheet and note they are lending in and overbuilt market, in excess of the defaulting loan amounts?

P.T. Barnum is right, but how long will this madness go on? And was P.T. talking about people or lenders?

About 60 of the homes are still owned by flippers. Most of them are still vacant. Another year and there will be auctions and I predict these houses will be going for under $500,000, perhaps in the mid $450,000 range.

Amazing stuff. I have never seen anything like it. Of course, I said that about the price appreciation after 2004 also!

Sippn said...

I too saw some strange stuff here last year when 2 homes were put on the market in the $1.1-1.3mil range, immediately after closing for several hundred $K less.

The big problem withthose numbers was that price would get you into a nice new custom with a view in Folsom or El Dorado.

Gwynster said...

Nice coverage on this. I actually drove around Woodhaven in Dec and it was a sea of for sale and for rent signs. We have a project in Woodland that is supposed to be all custom offerings. There are spec homes just sitting on the market and the rest of place is dirt.

Someone posted on thehousingbubble that Coldwell Banker just released 40 more foreclosures on the market on 2-16. This is getting downright ugly.

darth toll said...

I'm sorry but I'm not seeing that these houses are worth any more than about $350K. This is Rancho Cordova for cryin' out loud! These are nothinf more than crappy McMansions. And yes, sittin', it is amazing that there is a whole brand new group of FB's being created even as we speak. It's pretty obvious that most people haven't even heard about the housing bubble, as strange as that sounds.

Another thing we have to watch for in those recent sales is mortgage fraud. Especially if any of these houses all of a sudden sell for dramatically more than listing price.

Max said...

Another thing we have to watch for in those recent sales is mortgage fraud. Especially if any of these houses all of a sudden sell for dramatically more than listing price.

I'm not using that word with JTS right now, but the activity looks highly suspicious to me. Houses sold by JTS in the last year top the FIT lists in Placer, Sacramento, and Yolo counties. That takes the term "spreading risk" to a whole new level. :)