Wednesday, January 28, 2009

Monterey Village Is Back (mostly)

According to the Sacramento Bee, a vulture fund has purchased half of Monterey Village, the half-built former Dunmore Homes development in Elk Grove:

"A Los Angeles firm has jumped into a macro version of buying a bank repo.

It scooped up 187 home lots and 35 unfinished homes, buying half of a repossessed Elk Grove subdivision named Monterey Village...

Strategic Investment Partners said it will finish homes abandoned during construction when Dunmore ceased operations and closed the sales offices on Sept. 28, 2007. The partners also hired Mode and Durham, a team of Elk Grove real estate agents to sell the project's leftover homes.

"They just went on the market last Saturday," said Lori Mode, a Keller Williams agent. Prices range from $199,000 to $274,000, well below original prices that lured buyers into the gated project."
"Strategic Investment Partners" is surely an optimistic group, as evidenced by the prices they're asking for the completed units:


5200 Ocean Ln
Elk Grove, CA 95757
Asking Price: $342,000
Bedrooms:4    Baths: 2    Sq. feet:2119
Last Listing Date: 2009-01-24
True days on market: 4
# of Times Listed: 1
MLS# 90006558      Google Maps
Assessed Value       Property Tax Bill



5204 Ocean Ln
Elk Grove, CA 95757
Asking Price: $315,000
Bedrooms:3    Baths: 2    Sq. feet:1825
Last Listing Date: 2009-01-24
True days on market: 4
# of Times Listed: 1
MLS# 90006564      Google Maps
Assessed Value       Property Tax Bill


5105 Ocean Ln
Elk Grove, CA 95757
Asking Price: $312,500
Bedrooms:3    Baths: 2    Sq. feet:1825
Last Listing Date: 2009-01-24
True days on market: 4
# of Times Listed: 1
MLS# 90006299      Google Maps
Assessed Value       Property Tax Bill


5213 Ocean Ln
Elk Grove, CA 95757
Asking Price: $274,000
Bedrooms:3    Baths: 2    Sq. feet:1425
Last Listing Date: 2009-01-24
True days on market: 4
# of Times Listed: 1
MLS# 90006307      Google Maps
Assessed Value       Property Tax Bill


5020 Ocean Ln
Elk Grove, CA 95757
Asking Price: $272,000
Bedrooms:3    Baths: 2    Sq. feet:1711
Last Listing Date: 2009-01-24
True days on market: 4
# of Times Listed: 1

Previous Sales:

MLS# 90006569      Google Maps
Assessed Value       Property Tax Bill




Here's what a bank repo is asking right now:


4912 Ocean Ln
Elk Grove, CA 95757
Total Loss: $166,500Percent Loss: 46.8%
Asking Price: $189,000
Bedrooms:3    Baths: 2    Sq. feet:1638
Last Listing Date: 2009-01-24

Listing History:
Down 16.3% from $225,900 On 2009-01-10

True days on market: 18
# of Times Listed: 1

Previous Sales:
Sold on 2007-05-30 for $355,500

MLS# 90001584      Google Maps
Assessed Value       Property Tax Bill


Keep in mind, this "development" is mostly a vacant lot. Here's a photo I took in 2007 flying over Elk Grove in route from LA:

I wish them luck completing what has become an eyesore, although I doubt they'll have much luck at those prices.

10 comments :

Deflationary Jane said...

great coverage on this Max!

patient renter said...

Wow, those prices are VERY optimistic.

This goes to show, just because swarms of "investors" are snapping up foreclosed homes and such, it doesn't mean they have a clue what they're doing and it certainly doesn't mean their purchase is indicitave of a bottom or recovery.

Max said...

This whole deal has a smarmy feel to it. The agent has no houses in this development listed for $199k, so she either sold them already (doubtful) or she's, shall we say, mistaken.

Truth is, nobody in their right mind would move into this development without some kind of real assurance that it will be completed in the near future. I'd like to see actual construction taking place, at the very least. Either that, or I'd expect to pay below comp to compensate me for the risk. Then there's the other uncompleted half to deal with...

Anonymous said...

Was wondering also as most of the homes I'm seeing are in the low $100s per foot but looking more carefully at these, the "repo"is actually a short sale, and more importantly, its in one of the clusters backing to whitlock - very small lots almost detached condos. The higher priced homes are SF lots that are at lease 2x the size of the cluster home lot.

Looking through MLS, you can see other homes are selling in the range that these guys have marketed them for (Pulte, etc).

Are all investors speculators? is everybody who invests in the stock market a speculator? I thinks maybe those who never put any cash into a home purchase, never moved in.... was a speculator.

Course, I don't watch the EG market much.

Sippn

Deflationary Jane said...

Speaking of completion - I'm not great at FHA when it comes to new homes but doesn't the development have to be sold up to a certain % before it qualifies for FHA financing? If FHA is the greater % of the buying public (actual home buyers as opposed to speculators) how are these things going to sell at a premium price?

Max said...

68 4 bed, 3 bath houses in 95757 for $300K or less
39 3 bed, 2 bath houses in 95757 for $225 or less

These guys are asking way over market.

patient renter said...

Are all investors speculators? I thinks maybe those who never put any cash into a home purchase...was a speculator.

My definition of speculator is simpler than that. You're a speculator if you buy RE with the hope/expectation that its value will increase substantially just by sitting around and waiting. Throwing in cash or not doesn't matter. Living in it doesn't matter.

Today's speculator is banking on major prices increases, and they truly don't understand that appreciation faster than inflation is not normal. The bubble mentality is waiting for its glorious return.

Max said...

its value will increase substantially just by sitting around and waiting.

The way this thing is being handled, it looks more like a con. My gut feeling (totally speculating here, no evidence whatsoever) is they're trying to finance completion of the half-built stuff with profit from the sales of the other units.

Like I said, I wish them luck getting this thing done. Those empty, half-built units are a real eyesore.

Anonymous said...

PR - isn't that what people do when they "invest" - they put cash in (stocks, bonds, real estate) sit on their butts and wait. The potential gain is for the use of their money and there is value to that.

Max - Now days, I'll bet these guys had to find 40-50% cash to get a bank to participate. Maybe 100% cash. Of course, somebody elses cash. But thats how its done, profits and cash from the finished sold units are rolled into the next with some peeled away for profit AKA return or in simpler terms, take home pay for the people running the thing. That's how all businesses run.

They likely have a rolling option to purchase or "take down" the rest of the project on a phased basis.

Sippn

Max said...

That's how all businesses run.

All I'm saying is there's some disingenuousness at the prices they're asking. From their perspective, it's great to clear a vastly above market price for the units, but as a buyer, to pay what they're asking is crazy. These guys aren't acting irrationally, so what gives?

Maybe they're hoping to get lucky. But if luck fails, do they have a plan B?