Wednesday, September 26, 2007

Dun

UPDATE: More stories about Dunmore Homes. From Builder's Online:

Faced with declining sales in a sputtering Sacramento, Calif., market, venerable home builder Dunmore Homes was sold today to Michael Kane, well known in the local real estate industry.
...
John Slaughter, vice president of construction and operations, said the company cut its staff from 134 employees to 45 from 2006 to 2007, and anticipated closing slightly more than 200 homes this year - roughly 25 percent of its 2003 peak. Slaughter said the company expected no further layoffs and planned to move forward under the Dunmore Homes name with Sid Dunmore acting as an advisor.
From the News10 (and video):
Contractors have filed millions of dollars in liens against Dunmore Homes, and in some cases against people who bought the houses. Lukas Allred, who bought a home in Monterey Village in May, discovered the company that built his fence has filed a lien against him. "We purchased our homes with free and clear title, and now we're finding out there are liens on our homes that aren't our responsibility," complained Allred.
From the Sacramento Business Journal:
Dunmore Homes, a fixture on the Sacramento residential construction market since 1953, has been acquired by a Sacramento businessman who is pursuing a restructuring of the company, Dunmore Homes announced Wednesday. The transaction involved transfer of assets and assumption of liabilities to a successor company owned by Michael Kane, a Sacramento native.
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"The recent decline of sales in today's homebuilding industry has had a devastating effect on most private and public homebuilders," ["bouncing around the bottom" Sid] Dunmore said in a prepared statement.
From the Sacramento Bee:

Housing decline forces Dunmore to sell company

Granite-Bay Dunmore Homes, a local family owned builder since 1954, has become the first major home builder casualty of the slumping Sacramento-area housing market...The news highlights the growing difficulties of home builders in a market that is mired in a massive oversupply of for-sale inventory. Many buyers are also reluctant to commit while prices are falling.

Photos of Dunmore's Monterey Village development in Elk Grove here.

From the Sacramento Bee:
Tough times in the national housing market led to a company record loss of $513.9 million for Lennar Corp. in the third quarter, with drops in sales prices and home deliveries compounded by heavy charges to write down land values. Its shares fell almost 4 percent. Lennar, one of the nation's largest home builders, said Tuesday it had cut its work force by 35 percent this year and that it expects to pare more employees soon.
...
Lennar is the Sacramento region's third largest home builder so far this year with 420 sales reported from January through July, according to Costa Mesa-based Hanley Wood Market Intelligence. That's down sharply from 747 sales at the same time last year. Lennar, which also operates in the region as U.S. Homes and Winncrest Homes, has projects in Rancho Cordova, Roseville, Natomas and El Dorado Hills. Its biggest is at Rancho Cordova's Anatolia community, where it is a partner with Sacramento-based AKT Development.
From the Sacramento Bee:
It's no secret that Sacramento and many other California cities grew dependent on the booming housing market to drive economic growth. Statistics released Wednesday show just how true that was. Construction and finance accounted for 40 percent of metropolitan Sacramento's economic growth in 2005, the most recent figures available, according to a report by the U.S. Bureau of Economic Analysis. The national average was 27 percent.
From the Tri-Valley Herald:
Anderson Homes is auctioning off 34 homes in the Paseo West subdivision in Manteca far below asking price as a way to stir up interest among homebuyers and move homesquickly...Neighbors in the Paseo West subdivision have voiced their frustration to local newspapers about the prospects of an auction — including that they paid more for the homes when the market was booming and that housing speculators would bring in renters or the potential for foreclosure.

"It's certainly something we've thought about, but also we looked at what we paid for land and the continued downward trend in the market," Barton said. "We feel the auction could give the buyers out there a shot in the arm." "We wanted to make sure those empty houses next door were filled with families," Anderson said, noting the problem San Joaquin County and Manteca has had with foreclosures and abandoned properties.
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The case of Anderson Homes is similar to situations throughout the Bay Area and San Joaquin Valley, said Daryl Franks, director of franchise sales for Pacific Auction Exchange. "It's a question of what's worse, do you want to slowly die of a thousand cuts or do you cut the arm off," he told a group of local real estate experts Tuesday with regards to the current housing climate.
From the Stockton Record:
...[S]ales prices dropped off in this region, falling 11.5 percent in the Central Valley, to $309,740, and 12.1 percent in Sacramento, to $332,510, the report said....Central Valley sales were down nearly 34 percent year-to-year, the state association's report said...Leslie Appleton-Young, chief economist for the Realtors association, said the sales market was already challenged by low affordability, tighter credit standards and expectations of lower prices, but the sales decline accelerated in August because of the credit or liquidity crunch that began in July.
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Real estate agents and brokers in San Joaquin County complain that the increase in foreclosures is the top reason the sales market is so slow...Foreclosures have clogged the market, and until they clear out, there's little hope for a normal sales scene, said Mike Collins of Collins Realty in Stockton.
From KCRA:
Four men accused of being involved in a mortgage fraud scheme will face charges in federal court, U.S. Attorney McGregor W. Scott said Tuesday. In an indictment unsealed Tuesday, a federal grand jury charged James Roy Martin, 36, Mario Fellini III, 38, Gabriel Richard Viramontes, 44, and Joseph Salvatore Gallo, 34, with bank fraud and conspiracy to launder money, Scott said. Martin, Fellini and Gallo were also indicted on charges of making false statements in loan applications, and Martin, Fellini and Viramontes were indicted on mail fraud charges, Scott said.
From the Sacramento Bee:
If convicted, the defendants face up to 30 years in prison and fines up to $1 million each for bank fraud. Mail fraud carries penalties up to 20 years in prison, while money laundering can draw sentences up to 10 years, federal authorities said...Assistant U.S. Attorney Matt Stegman said the case is one of several area mortgage fraud cases being investigated by federal authorities in the wake of a housing boom that saw a major relaxation of lending standards and a rise in allegations of loan fraud.

17 comments:

Cmyst said...

It's really hard to fathom how a builder who has been in business since 1953 could have not seen the bubble for what it was.
I remember coming here after the last bubble broke and at the time Laguna had a lot of abandoned projects and "roads to nowhere", homeowners were upside down, etc. I had a co-worker begging us to buy her home so that she could return to North Carolina. We wanted to help her, but she owed too much and we had found a place we liked a lot more for a lot less money.
This isn't a new phenomenon, and especially if you're in the industry I'd think you'd have a little more smarts.

Jacob said...

GREED, that's how. Nobody or company that was making money wanted to see that there was a bubble. They ignored the signs and now the market will correct itself.

Builders will go under, lots of bankruptcies for owners / specuvestors.

Lots of crying and blaming.

But at the end of this we will get back to normal.

I think there will be a lot of retail companies hurting after this Xmas has really poor sales.

SacramentoCrash said...

Jim Martin "Mortgage Strategist" AKA LOAN PIMP

Watch his sorry rear end go down in flames!

SacramentoCrash said...

The father started the company.

The son screwed it up.

Typical family business sob story.

Sacto EJ said...

James Roy Martin, 36, Mario Fellini III, 38, Gabriel Richard Viramontes, 44, and Joseph Salvatore Gallo, 34

Give them a nice, fair trial.
Give them a nice, fair verdict.
Give them a not so nice sentence, in a very not nice prison.

They earned it. I just hope that the rest of the crooks get similar treatment. The devastation they caused and aided will hurt thousands of families for years.

-EJ

smf said...

"They ignored the signs and now the market will correct itself."

Nah, they also figured that if a homeowner got in trouble, they could all sell at a profit.

HOUSE2008 said...

Man I hate to say it but that's business. The rules are bent towards industry ( banks, hedge funds, ect) This is how the game is played.

Millionare (hedge fund broker) investor buys 10 homes(2005) with no capitol of his own but instead uses the Banks money through a broker who is his Ivy league buddy. Buddy gets a commision. Investor sells some but has 7 still left. (by the way when Millionare got back to his hedge fund office he cut up the mortgages & sold them as securites to foreign investors say Northern Rock :) Can't sell them? Walk away from them. Bank can't possibly hold that many bad loans & has to go to say, Bank of Emgland for bail out:( The overnight mortgage company goes out of business. (originally set up by a hedge fund via third party company) Then Millionare informs boss that they could buy Northern Rock for cheap & New centry or Norhtwest Mortgage. Boss like the idea & buys the very bank that orginated the loan to Millionare hedge fund investor. Oh & Wall street ask the Gov't for a bail out (they will) & Hedge Fund millionare will be back to buy those home that he walked away from on the CHEAP and re sell them at a profit again. Full circle. Legal. It sucks. But multiply this by the thousands.

norcaljeff said...

Gee, I hope Sippin didn't hurt himself with all this good news :)

Rob Dawg said...

We purchased our homes with free and clear title, and now we're finding out there are liens on our homes that aren't our responsibility," complained Allred.
Ummmmm. No. sorry but liens are on houses. If it is your house it is your responsibility. Complain all you want but pay up sucker.

Patrick Hake said...

I may be biased because I represent people in buying resale homes, but I can't see why anyone would risk buying a new home, unless they were receiving a large discount in price.

The saying goes, "Location, Location, Location". The fact is with new homes the location is unproven and has numerous unknowns associated with it.

I understand that people like the idea that it is clean or has trendy new features, but what about the unknowns regarding the neighborhood.

Good neighborhoods are made by good neighbors. If you don't know who your neighbors are going to be, how can you tell if it is going to be a good neighborhood?

Truth is, when you buy a new home you may or may not have good neighbors, the parks may or may not be built, the commercial buildings may or may not be built, the schools may or may not get funding, the builder may or may not sell all of the units before going bankrupt.

It seems like a lot of risk, when you can just as easily buy a home with established neighborhoods, parks, shopping, schools and infrastructure.

Then again, you won't get an 8,000 sqft home on a .10 acre lot guilded in granite countertops and stainless steel appliances.

Gwynster said...

HOA and mello Roos are deal killers. I will only look at existing homes because I know that HOA fees are often subject to "revision". Anyone who bought condos in the late 80's is going to be familiar with this.

Rob Dawg said...

The saying goes, "Location, Location, Location". The fact is with new homes the location is unproven and has numerous unknowns associated with it.

You underestimate. Let's face it. After a dozen years of buying the best land and next best land and... by now the new houses are in the sh¡tiest places. Have you checked out the UC Merced south tracts? GMAFB. Locally at least half the recent housing is in a flood plain.

I am reminded of my very very earliest real estate education. Visiting my parent's friend on the Gulf coast of Florida in the mid 60s when I was 5-6 years old. I asked my dad why all the houses were together up from the pier and they were all old and he explained that there were houses and they were newer on some of the empty lots, just not anymore.

Rob Dawg said...

HOA and mello Roos are deal killers. I will only look at existing homes because I know that HOA fees are often subject to "revision".

Gwynie, don't be so fast. Mello-Roos in mature communities nearing the end of the term can be an opportunity. That's 15 years old houses at the start of the great rip-off of Mello-Roos but still don't throw out a baby with the pooy diaper.

norcaljeff said...

Buying a fully loaded home with a warranty at 30% or more less than an existing home in a good part of town is hardly risky. And compare that to a home with no upgrades, dog hair, problems, out of date kitches/appliances, etc. But considering an agents' commission is about 90% less on a new homes v. existing (old) I can see why you are against that.

Patrick Hake said...

NorcalJeff,

Do you even read a post before you respond to it?

My words exactly in the first paragraph of my comment: "unless they were receiving a large discount in price."

At the right price any home is a good deal.

If the assumption for your argument is that you can buy "a fully loaded home with a warranty at 30% or more less than an existing home in a good part of town", you are right.

Keep in mind, the 30% discount is probably from what the builder was originally asking not the market rate, the upgrades will be outdated in 5 years, the warranty is only good if the builder hasn't gone bankrupt and if the track is in a good part of town, it is probably on the outskirts of that part of town, because the best building locations have already been taken. Oh, and the lot is probably 1/2 the size of the other homes in the area, because developers make their money by selling people 1/2 the real estate for double the price.

If you can find a new home for 30% less than the market rate in the heart of an established neighborhood, by all means jump on it.

P.S. Most builders offer cooperating commissions on par with the resale market. Many offer above market rates.

Gwynster said...

I'd consider a new home if there was no MR or HOA. I like that their are now set commissions on new homes. The trade off is those additional fees - no thanks.

In the end, it comes to price per sqft for me, both lot and building.
Everything else is just a means to negoticate the price down **evil grin**

norcaljeff said...

PH, new homes still are better values, might not get the 200 year old oak tree but....
From what I hear, broker/agents get about $2-3K on a new home, was almost zero in the hayday, but on a $400K home you're talking $24K, that's quite a spread economically.