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Are They Like A Used Car Where The Moment You Drive Them Off The Lot They Lose Value?

A report from the Acadiana Advocate in Louisiana. “When Jose and Angie Medina got married in 2007 the 33 lots in the Gideon Grove subdivision outside Youngsville were still mostly empty. But the developer, Roderick Cawthorne, persuaded them the sparse neighborhood would soon be filled with young families living in custom homes.”

“Twelve years later, Jose Medina calls that picture an ‘illusion.’ On recent visits, unfinished culverts lined the main drag of the subdivision, Gideon Road, which was littered with construction debris. ‘We bought the house, and then he said, ‘I’m not the kind of contractor that’s here today and gone tomorrow.’ Probably two weeks later we couldn’t find him,’ Angie Medina said.”

The debt Cawthorne complained about to residents came primarily from lenders who appear to specialize in risk who loaned millions to awthorne over a decade, despite his repeated defaults. One of those lenders, Colorado attorney Stephen Replin, authored a book titled ‘Where To Go When The Bank Says No!'”

The St Louis Post Dispatch on Missouri. “It has been a messy divorce. At City Hall, officials had lost faith that Paul McKee could finance the projects he promised, and allegations of state tax credit fraud, which surfaced last spring, were the final straw.”

“Meanwhile, most of the properties NorthSide owns continue to decay. Few of those structures are salvageable, a far cry from the 152 rehabs McKee promised in a 2013 plan submitted to the city. More than 200 of NPorthSide’s properties have been condemned by the city; many, unsecured and abandoned, have simply crumbled. The historic Clemens House, which McKee once promised to renovate and turn into senior apartments, burned in the summer of 2017.”

“Sunshine Ministries, a nonprofit that works with the homeless north of downtown, has managed to reach a deal with McKee over the years. He owned one of the parcels on the site where Sunshine built its new men’s shelter. Years ago, Carol Clarkson, Sunshine Ministries director, was looking at another property he owned on North Florissant Avenue. The price he asked seemed well above market, and she didn’t go through with the deal.”

“‘I know it’s inflated,’ she said McKee told her. ‘But I want to make sure I keep my comps up.'”

The Shawnee Mission Post in Kansas. “Just this week I was making calls around a recent Prairie Village listing to see if any of the surrounding neighbors had given thought to selling with the spring market now in full swing. I have noticed recently that there are quite a few $800K homes sitting on the market currently when there was a time when they would barely get the foundation poured before the home was under contract.”

“I have noticed recently that there are quite a few $800K homes sitting on the market currently when there was a time when they would barely get the foundation poured before the home was under contract. Currently there are eight single family homes (five years old or newer) for sale over $800,000.00 in Prairie Village, all of which are new construction with the exception of one.”

“In the last two months, only one home in that price range has gone under contract and it was a new construction property in the low $800’s. Quick math tells me that at that sale rate, there is currently sixteen months of inventory in the PV luxury market when only one is selling every two months.”

“Another piece of this story to watch are the resale of tear downs that have been owned and lived in over the last few years. This spring is presenting the first of these homes where essentially lightly used tear downs are now competing with new construction tear downs which have never been occupied. This will be an interesting story.”

“I say it will be interesting because the PV market has seen home value appreciation over the last 2-3 years, but how much have the new homes appreciated? Or are they like a used car where the moment you drive them off of the lot they lose value? And if so, how much? In other areas of town currently, where resale properties are competing with new, the new properties are achieving the highest sales prices and the previously owned homes are selling for less to compete. Why would Prairie Village be any different?”

“The graph above shows the number of new homes ($800K+) that have hit the market in a given month over the last year. You can see that in February 2018 there were no new luxury homes that listed for sale. This year, however, five new luxury properties hit the market in January and four in February. These early 2019 listings could be the reason for the increase in inventory. Considering that only one has sold in the last 60 days yet nine new listings have hit the market, the demand for these homes simply cannot keep up.”

This Post Has 26 Comments
  1. ‘We bought the house, and then he said, ‘I’m not the kind of contractor that’s here today and gone tomorrow.’ Probably two weeks later we couldn’t find him’

    This article is full of crazy stuff.

    1. “Gideon Road and Sayfert Road” <— Google search, click on the resulting map, rotate the view 360-degrees.

    2. Well to be fair he was there “tomorrow”. He just wasn’t there the day after tomorrow. So technically he didn’t lie.

  2. ‘I have noticed recently that there are quite a few $800K homes sitting on the market currently when there was a time when they would barely get the foundation poured before the home was under contract’

    Yeah, and spotting a bubble is difficult.

  3. ‘We bought the house, and then he said, ‘I’m not the kind of contractor that’s here today and gone tomorrow.’ Probably two weeks later we couldn’t find him,’ Angie Medina said.”

    I am shocked, shocked! that a developer would lie to marks, er, clients.

    1. “Probably two weeks later we couldn’t find him”

      Just like any other realtor or UHS, they don’t how or who payed them as long as they get paid, them off to Costa Rica with the FBs cash 😉

    1. Remember everyone. Hollywood people are really smart. You should always listen to them when it comes to politics.

      1. “You should always listen to them when it comes to politics.“

        And real estate! Warren Buffett and Justin Bieber just two name two off the top of my head!

        #susannetoldmetobuyandibelievedher

  4. Preferred Bank Disposes New York OREO Properties

    ‘Preferred Bank, (the “Bank”) an independent commercial bank headquartered in Southern California, today announced the disposition of the Bank’s two non-performing multi-family properties located in Manhattan, New York which were acquired through foreclosure of two non-performing loans in January 2019. The Bank sold the two properties, with a book value of $36.9 million in one sale to one buyer. This transaction closed on March 29, 2019 and due to transfer and other taxes associated with the sale, the Bank will record a loss on sale of approximately $1.4 million.’

    ‘Preferred Bank (the “Bank”) is one of the larger independent commercial banks headquartered in California. The Bank is chartered by the State of California, and its deposits are insured by the Federal Deposit Insurance Corporation, or FDIC, to the maximum extent permitted by law. The Bank conducts its banking business from its main office in Los Angeles, California, and through eleven full-service branch banking offices in California (Alhambra, Century City, City of Industry, Torrance, Arcadia, Irvine, Diamond Bar, Pico Rivera, Tarzana and San Francisco (2)) and one branch in Flushing, New York.’

    ‘Preferred Bank offers a broad range of deposit and loan products and services to both commercial and consumer customers. The Bank provides personalized deposit services as well as real estate finance, commercial loans and trade finance to small and mid-sized businesses, entrepreneurs, real estate developers, professionals and high net worth individuals. Although originally founded as a Chinese-American Bank, Preferred Bank now derives most of its customers from the diversified mainstream market but does continue to benefit from the significant migration to California of ethnic Chinese from China and other areas of East Asia.’

    https://www.nasdaq.com/press-release/preferred-bank-disposes-new-york-oreo-properties-20190329-00741

      1. B…b…but such blatant NIMBYism is surely at odds with the compassionate liberalism and charity these progressives pride themselves on.

      2. “Residents along San Francisco’s well-to-do waterfront properties in South Beach and nearby Rincon Hill have opposed Mayor London Breed’s proposal to create a 2.3-acre homeless resource center near the Bay Bridge and Pier 30 at Seawall Lot 330, which would house 200 homeless residents.

        “Navigation Centers, which launched in 2015, aim to go above and beyond regular shelters, focusing on ‘homeless residents who are often fearful of accessing traditional shelter and services,’ and providing temporary shelter ‘while case managers work to connect them to income, public benefits, health services, shelter, and housing.’

        “But not everyone wants to see them take root in their neighborhood.”

        I am in full support of this agenda. There are many poor, suffefing homeless people living in Southern California who would benifit immensely by being shipped up north to the benovelent and caring citizenery of San Francisco.

        1. A week in the life of a Bay Area Progressive:

          Day 1: Someone needs to do something about the homeless problem. Oh please, progressive mayor, that we love so much, do something!!

          Day 2: Mayor announces something will be done

          Day 3: Oh no no no no no. When we meant do something, we meant do something that won’t impact **US** in any way. We’re important people damn it!!

          Day 4: This is all Trump’s fault

          1. A similar thing happened the last few years in downtown SLC. The Road Home on the Rio Grande street was overrun with drugs, homeless, and mentally ill. There was open-air drug use and syringes everywhere. The major and a coalition of lawmakers tried to push the problem out into the suburbs and establish micro homeless shelters. Citizens clapped back loudly and said no way.

          2. “The Road Home on the Rio Grande street was overrun with drugs, homeless, and mentally ill. There was open-air drug use and syringes everywhere.”

            China doesn’t have this problem in their largest cities.

      3. “I don’t blame people for having opinions about their neighborhoods,” argued Sen. Scott Wiener. “I do blame a bad system that allows people to delay or kill projects that help homeless off the streets. The same system that‘s given us a housing crisis.”

        Does he really believe this is what caused the housing bubble, AKA crisis?

  5. Get used to these headlines. They are typical when markets start to slide. Just like last go around.

    1. We’ll know the implosion of Housing Bubble 2.0 is reaching terminal velocity when the same Real Journalists who studiously ignored all the indications and warnings of another housing bubble bust start filling their fish wrap with FB tales of woe, as if each and every one was a victim of unscrupulous lenders rather than being greedy and reckless fools.

  6. New cars lose value on day 1. But a used car isn’t worth any less the second it drives off the lot since the depreciation curve has flattened out.
    And besides, you should never buy a used car from a dealer. Buy private for a lot cheaper. And always get a PPI, whether buying private or from a dealer.

    1. Also read “The Market for Lemons” to understand why buying used can (sometimes) be dangerous.

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