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alstry (34.93)

Weeds As Far As The Eye Can See

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May 25, 2008 – Comments (2)

Yesterday, I drove north on Highways 5, 99 and 70 into that Yuba County growth frontier that offered such a great relief valve earlier this decade for people with jobs in Sacramento who couldn't afford to buy houses in Sacramento.

It had been a few years since I've seen the place - especially those giant master-planned communities of Edgewater and Plumas Lake that rose off the flat lands almost overnight. I am telling you: it is hard to overstate what a fall they have taken.

 I knew sales have been slowing for a couple of years up there as it became cheaper to live in Lincoln or elsewhere near Highway 65 and to skip the commute. Now, gasoline is so expensive - $4.19 yesterday at the Shell station on the exit ramp to Olivehurst's Edgewater - that people have to think hard and long about buying up there and driving 40 or 50 miles south every day.

What did I see? Obviously there are the thousands of houses built during the boom to start with. It's amazing how many people have moved up there. Thousands. You have to see it to believe it. Yuba County dreamed a big dream and everybody came.

But it was the abrupt end of it all that really got my attention. I don't think I saw more than 20 houses being built all day - and most of those were at a D.R. Horton project in Plumas Lake that I am sure they are trying to be done with and move on.

 Mostly, it was acres and acres of dead subdivisions that just jumped out at a driver touring this part of the state. In so many places the streets and sidewalks are in, the utility wires are sticking out of the ground, the street signs are up - and it's nothing but weeds almost as far as you can see.

It's also the houses still awaiting buyers: In Edgewater: A street of 20 houses built by Roseville's JMC Homes with only one house occupied.
 
 In Plumas Lake: a Ryland Homes subdivision called Thoroughbred Acres. Five lovely models and nothing else. Behind it a pile of Ryland flags and poles. I walked up to read the writing on the flags and a jackrabbit ran off. Down Arboga Road, another subdivision by Lakemont Homes. Even the models had dead lawns.

http://www.sacbee.com/static/weblogs/real_estate/archives/012790.html

The key to take away from the above article is not simply the fact that certain geographical regions have issues...as investors, you should be aware that many of the issues are concentrated where new homebuilders built in the last five years.  The overbuilding goes directly to the current oversupply of inventory.  Those areas suffering the most are often the areas where new home builders congregated.

It doesn't take a genius to figure this out.....just someone to present the facts fairly.....and right now, America's housing industry is about to experience on heck of a hangover.....unfortunately so are many leveraged homeowners trying to sell their homes who couldn't foresee what was coming.

2 Comments – Post Your Own

#1) On May 25, 2008 at 10:30 PM, EScroogeJr (< 20) wrote:

A Florida homeowner: keeps in his garage a robotic lawn mover to protect his household from the homeowner association.

A Texan homeowner: keeps in his garage an artillery battery to protect his house from commies, homosexuals, liberals and other un-Americans.

A Californian homeowner: keeps in his garage a bulldozer to protect his appraized value from other houses.

:):):) 

 

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#2) On May 25, 2008 at 10:54 PM, DemonDoug (80.85) wrote:

The desert will reclaim many of those subdivisions.  Article today in the LA Times talked about water from the CO river - if we get a real drought as many long term meteorologists are forecasting, watch out.

Scrooge, I have a better one for you:

Q: What did the real estate agent say to her client?

A: Would you like fries with that? 

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