Friday, November 09, 2007

Dunmore Homes Files For Bankruptcy

From the Associated Press:

Residential homebuilder Dunmore Homes Inc. filed for Chapter 11 protection in New York, the latest victim of the faltering U.S. housing market. The privately owned builder, based Granite Bay, Calif., near Sacramento, listed assets and debts each of more than $100 million in its bankruptcy petition filed Thursday with the U.S. Bankruptcy Court in Manhattan. The company didn't say what prompted it to seek bankruptcy protection. But Michael A. Kane of Granite Bay, the sole owner of Dunmore, according to the bankruptcy filing, said in court papers that the Chapter 11 filing was in the "best interests" of the company, its employees and its creditors.
“We have engaged our lenders in a process to restructure our debts,” said Michael Kane, Dunmore Homes’ owner, “and while certain creditors took positions requiring us to seek the protection of the bankruptcy court, we intend to continue focusing on our restructuring efforts while ensuring all creditors are treated fairly.”
Looks like the moths just got burned. From the Sacramento Bee:
On a perfect Saturday in June the lemonade flowed, cookies abounded and cheerful crowds flowed through Pardee Homes' eight model homes in Natomas. It was a memorable opening day in Natomas for a Los Angeles builder launching the first of its 660 houses near downtown.

Now, just five months later, Pardee has closed the project. Sales offices that opened during a national subprime loan crisis that quickly worsened into a credit crunch have been shut. Building crews have been laid off and deals made with only four buyers canceled. Three other regional builders have done the same in recent weeks. Their actions are the latest indicator of how brutal the Sacramento market has become for area home builders as they fight one another for sales.
Milwaukee-based Homes by Towne also has mothballed its 145-home project in Natomas called Sky Park at Natomas Field and a 50-home project in Elk Grove called Spring Gardens. The builder has stopped construction at its 227-home Yuba County project called River Landing at Plumas Lakes...Rocklin-based Nouveau Homes has taken similar action with a 51-home project in Lincoln called Crystalwood. It was the builder's only active development, according to Costa Mesa-based building industry tracker Hanley Wood Market Intelligence.
"They can't compete anymore. All these builders, they aren't making any money on any of these homes," said Kathryn Boyce, analyst for Costa Mesa-based Hanley Wood Market Intelligence. "They're losing money on all the homes they're selling right now." Ironically, Boyce said, it's the aggressive price cuts and deals that builders are using to woo buyers that are making more buyers leery. She said many fear their houses will be worth less a week after they unpack.
From the Modesto Bee:
It's been a tough year for builders, and those who attended Thursday's Central California Housing Summit heard little cheery news about the near future...New-home sales have plummeted 62 percent in Stanislaus, San Joaquin and Merced counties since their 2004 peak, said Rick Baldonado, regional director of Hanley Wood Market Intelligence. He said sales in the region's 248 subdivisions are so slow that, at the current pace, it would take nearly four years to fill all the empty lots..."Standing inventory is definitely a thorn in our side," Baldonado told the builders. He asked audience members to tell him when they thought the market would turn around, and the majority there predicted 2010.
To increase sales, the speakers agreed homes need to cost less...Alan Nevin, the California Building Industry Association's chief economist...predicted that empty lots in many large-home subdivisions will be sold at significantly reduced prices to other builders, who then may be able to build houses priced below $250,000.
From the Modesto Bee:
A Stockton builder's decision to halt work on an Oakdale Road subdivision means the company also is pausing on street improvements it agreed to install. Florsheim Homes postponed its Rose Way development in September after it began preliminary work on the 26-acre project between Mable Avenue and a planned extension of Claratina Avenue. As a result, Oakdale Road cuts off to a ditch on its west side.
From the Sacramento Business Journal:
A deal to sell Southport Industrial Park in West Sacramento has tanked due to the credit crunch, according to the broker marketing the high-profile property.
From the Appeal Democrat:
A decline in the housing market is not only affecting homeowners trying to sell their homes, but also Yuba County’s financial status. County officials estimated revenues from property tax values would increase by 11 percent for the 2007-08 fiscal year, but the housing market decline shows an increase of only 8 to 9 percent, a reduction of roughly $300,000. The projection has caused Yuba County officials to request an evaluation of building and impact fees.
From the Sacramento Bee:
Credit the global economy, said David Hill, executive chairman of Chicago-based Kimball Hill Homes, which builds in Sacramento and Stockton. Get over the idea of a domestic home building industry that relies on conditions inside the United States to thrive. The world's money is rushing in, he said, transforming the building industry that has so transformed the capital region in recent years.

"The Germans and many others are looking at a chance to own a piece of this great economy of ours," he told builders. Brush up on your foreign language skills, he advised local land brokers. As struggling area builders face prospects of land sell-offs, rich foreign investors will be there to buy.

Hill asked builders to think about who buys homes. Nearly one in three buyers now are recent immigrants – what Hill called "foreign-sourced homebuyers." And he sounded a warning. They're being made to feel unwelcome in the United States. "We're doing a lot of things in this country to make sure the foreign-sourced buyers can't get citizenship very easily, can't get documented very easily and are really looked at very suspiciously," Hill said. "All I know is there is fewer of them now. And they are subtracted from the demand."


Max said...

Wow, and I thought Dunmore was getting "bought out". I guess plans fell through...

I've been watching the unfinished buildings in Monterey Village slowly deteriorate. Luck for them it's been pretty dry lately.

Jacob said...

Yea, I am curious about what happened to Dunmore as well...

Prices seem to be declining a lot faster now. I am starting to see several in Roseville/Rocklin/Lincoln for <$125 ft2.

Saw a nice one today for $108 ft2 approximately 3000 ft2. The larger homes seem to be declining faster, but the smaller ones either cost more outright or cost less but cost a lot more per ft2. Eventually those will start to drop as well.

I might be able to buy next year after all, if things keep dropping off as much as they are. :)

Cow_tipping said...

Yeee haw ... However, its not big enough and its a little early in the game for me (remember how atleast 1 major builder will collapse) and how all of the other criteria will be met (atleast 1 bank will collapse and atleast 10% interest etc etc) ... I will take this as a 1/2 in the set of criteria to buy a house.
Couldn't have happened to a larger set of A$$holes ... I'm so happy.

Cow_tipping said...

Oh yea Dr Hill, lets throw open the borders to anyone with the $$ and they can buy. Well actually that is a great idea ... however the giving of loans to anyone from anywhere so they can buy your overpriced crap and not even check on their identity or their ability to make a single payment ... well that's the basic idea that got us in this mess in the first place.

Patient Renter said...

Wow indeed. That was fast.

anon1137 said...

Ct, that's an interesting idea, to limit immigration based on wealth. In other words, US citizenship, or at least visas, for sale to the highest bidder.

Or maybe allow US citizens to auction off their citizenship to settle their debts. It would be like, OK, you're behind in your mortgage payments, your house is worth $100K less than your mortgage, and you owe $25K on your credit cards. You can either declare bankruptcy and pay off these debts over the next 20 years, or you can start fresh as a citizen of southern China. Or trade places with this guy from Iraq and we'll erase your debts AND give you $2K spending money plus a camel.

SheWrestles said...

One of the super-sized ones in TB just hit the market at $100/sf (Mount Errigal).

And there's another new listing on Southcreek, which appears to have been the new Foreclosure Lane over here...taking the place of Alder Creek Ct, where value-priced homes are selling quickly.

Cow_tipping said...

Oy ... please no one repeat my Idea, lest some dumbass like Hill decides to buy off some politico's and implement it. Its right up there with George Carlin's Turn colorado into a prison cos its nice and square. Oh yea I had another decent idea. This one is worth implementing ... even if its a bit cruel and unusual and waaaaaaay off topic.
Say a guy is convicted of murder. He will be given an option. Donate a major organ like a lung or something or live in prison for the rest of his life or whatever the punishment is. That choice and the person to whom it will go to is decided by the family of the victim. How is that.

Gwynster said...

Here is one for those that follow the midtown/east sac area

MLS #: 70116342

Sure it's overpriced and small but check the price of the last sale?
03' pricing around the corner?

rocklin renter said...

I heard on KFBK about one of the builders pulling out of a in-progress development in North Natomas.

Anybody hear this or possibly have seen a story on it?

I want to say it's Pardee Homes.

Sippn said...

G - its priced well.

Pardee closed production for a year here.

Same with Towne and 1-2 others. Time to cap the wells until the price of oil is higher than the cost of pumping it out of the ground.

cow_tiping - unless you're a native amer - you can go back too!

Max said...

Yea, I am curious about what happened to Dunmore as well...

My bet: Dunmore's savior was somebody he owed money to, and the other creditors wouldn't come on board with whatever the plan was. When the news first hit in September, there were actually guys getting roof tiles laid as they tried to save the unfinished buildings.

Right now, there are still two large condo buildings without completed roofs at Monterey Village. The banks better pray for a dry winter.

Jacob said...
This comment has been removed by the author.
Jacob said...

Donate a major organ like a lung or something or live in prison for the rest of his life or whatever the punishment is. That choice and the person to whom it will go to is decided by the family of the victim.

So long as they have to donate 2 lungs or a heart I think it is a great idea.

anon1137 said...

Re: 70116342, that is no deal, Gw. And the fact that some idiot paid $260K for it in 2003 doesn't make it a deal either. That area is almost semi-industrial, with tiny houses packed onto tiny lots (that one is less than 1000 ft2 on a 3000 ft2 lot) among warehouses and big medical complexes . The sidewalks are narrow and there's no planting median between the sidewalk and street, so few, in any, street trees. One large or two small steps from the sidewalk to the front door. It's sort of eery to walk through there, which I have to do occasionally when I use that light rail station. And the topper is that it's within spitting distance of *two* of the busiest freeways in Sac. It's bubble pricing.

There's no use looking at listings for at least 3 y, IMO.

Gwynster said...


I agree. I guess I should have just said the situation sucks slightly less. I'm not interested until we get to 01 prices so I think we're on the same page

anon1137 said...

BTW, I saw your comment on people being especially brittle lately.

I got behind someone on the way to work this week, a couple in a small car, woman driving. They were yelling at each other at the top of their lungs as they drove along and every 2 blocks she would pull over and he would open his door, all the while the yelling continued. Finally she pulls over and he gets out and stomps down the sidewalk, and she follows him along, continuing to yell through the window. Scared the heck out of me (on bicycle).

I thought, mortgage stress, delayed family plans, high gas bills??? Felt sorry for the guy.

alba said...

I don't know how any medium-size builder can survive this turn of events. Even the most conservative builder must have a pipeline of land and developments. I would also assume there would be a mass consolidation of the industry, like most others. But with no revenues, and land decreasing in value, seems like bankruptcy is the only path left. Unfinished projects can only turn into very ugly long-term eye-sores, and neighborhood/city disaster zones.

HOUSE2008 said...

alba..."I don't know how any medium-size builder can survive this turn of events"

I was thinking the same thing as I toured those homes near Big Horn Blvd out in E.G. Every builder from Syncon homes to Cambridge, Morrison and Cresliegh homes all have their prices set at 400k-600k, and if my math is right I think you have to have an income over 150k to qualify. I mean, I don't see a lot of people running around making that sort of dough.

..."So long as they have to donate 2 lungs or a heart I think it is a great idea."

Only problem with that is about 99% have Hep C, B, Aids, and well, just about anything else you can think of....and some you haven't.

Cow_tipping said...

Oh right most career criminals aren't worth the cost of parting them out. Screw that, George Carlin's square prison idea is the best I got then.
Anyway, I'd expect someone like Centex of beazer buying up the 1/2 finished Dunmore crap, finishing it and selling it for 1/2 the $$$ and then building smaller Mc Mansions for the rset of the lots and bottom dollar pricing them. After all, the neighbors are people who bought from their competetion. Centex screwed Ryan and Galloway customers in my neighborhood, and Beazer screwed Weekley and Shea in the neighborhood I used to own before I bought the most recent POS.
A falling market will require a huge price differential. Other companies are the best line of defence against the angry customers.