Condo prices drop precipitously, owners plan to auction

By J.N. SBRANTI
jnsbranti@modbee.com

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Condo conversions were all the rage a couple of years ago, as seven Modesto apartment complexes decided to sell about 500 rentals as owner-occupied units.

The first couple of projects sold like hotcakes, filling a niche for lower- priced housing. Then the real estate market cooled, and sales slowed dramatically.

Now after two years of trying, one of those multifamily projects is giving up on traditional sales methods. Instead, the Villas at Creekside is going to auction off its final 29 units Nov. 18, with bids starting at $100,000 to $130,000.

That's less than half what those town houses sold for in 2005.

Creekside's co-owner Pat Cannon said they must do whatever it takes to sell.

"It costs us a lot of money to carry these units every month, and we can't keep digging ourselves in deeper," Cannon said. "We know it's time to move on, and we'll take the price we can get."

So any bid over the minimum will be accepted, and no extra sales or auction commissions will be tacked on, but those who buy will have to pay $220 per month in homeowners association dues.

The two-story town houses range from 1,098 to 1,375 square feet, each with two or three bedrooms. They originally were built in two phases, in 1984 and 1989, then rented as the Valencia Apartments.

Cannon and his partners purchased the 114 town houses in January 2005. They remodeled every unit, installing new appliances, carpet, cabinets, flooring, window coverings and paint. New roofs were installed and the exterior was spruced up.

"We probably put $30,000 a unit into them," Cannon said.

The 85 units that have sold went for $204,950 to $268,950.

At first, only those who planned to live there were allowed to buy. Now investors are being invited to bid, and the auction is being promoted in the Bay Area and in publications such as the Chinese Daily News and Sing Tao Daily.

Cannon said they must attract as many bidders as possible because if the town houses only sell for the minimum bids, then he and his partners will lose half their investment.

So will Doug Hopkins and his family, who bought a Creekside town house last year.

"We paid pretty much double (the minimum bid)," Hopkins said. "The owners already here are going to really lose out."

But new buyers could get bargain-priced deals.

That's what Rita Mae Ballard of Riverbank and her son, Troy Ary Jr., of Modesto are looking for.

"It would be a good opportunity to get into some affordable housing," said Ballard, who has been renting. "I haven't even been looking to buy because the prices have been too high. I needed prices to come down like this."

Ary said he wasn't thinking about buying himself until he toured Creekside with his mother.

"The amenities are beautiful here," Ary said.

Most of the Modesto apartment complexes that converted from rental to homeowner status did comprehensive remodeling to upgrade their amenities.

That was the case at Normandy Park Townhomes, 1212 W. Roseburg Ave.,which has 15 of its 54 units left to sell. They are priced at $239,000 to $249,000, with incentives worth $25,000 to $50,000 being offered.

Dennis Nairn, the PMZ Real Estate agent who sells the Normandy town houses, said he doesn't think his project and Creekside compete directly.

"That auction obviously is going to take 29 people out of the marketplace," Nairn said, "but I don't know if it's going to have an effect on us."

For more information about the Creekside auction, visit the town houses on Lincoln Avenue, just north of Penny Lane. The auction office, at 525-A Lincoln Ave., is open 10 a.m. to 5 p.m. daily.

The auction will be at 1 p.m. Nov. 18 at the Red Lion Inn, 1612 Sisk Road, Modesto. For more details, call 544-8753 or 800-522-6664, or go online to www.VillasAtCreeksideAuction.com.

Bee staff writer J.N. Sbranti can be reached at jnsbranti@modbee.com or 578-2196.