New subdivisions making almost no sales

Just 14 never-before-owned houses bought in September

By J.N. Sbranti
jnsbranti@modbee.com

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It's been a horrible year for Stanislaus County's new-home builders, and the traditional "slow season" hasn't even started.

Only 224 new single-family homes were sold in Stanislaus County during the first nine months of 2009. Compare that with 1,467 homes sold during the same months in 2006.

This September, the county's new-home subdivisions sold just 14 houses. That's about a 93 percent decline from September 2006, according to sales statistics gathered for the California Building Industry Association by Hanley Wood Market Intelligence.

Some builders say sales have continued to decline.

"It has been dismal since the middle of October," said Steve Mothersell, president of Modesto-based SCM Homes, which is building three communities in Newman.

Mothersell said his company has dropped house prices to below cost, with new homes in Newman offered for $109,000 to $158,000. He fears the Thanksgiving-through-New Year's season will be brutally slow.

"If you're a private builder these days, you're predominantly working to pay back bank loans, and we're no different," Mothersell said.

That's also the case in Turlock, where the county's newest subdivision, Cottage Park, has struggled since opening in March. Only seven homes in the 81-lot gated community have sold.

"If we didn't have a bank loan, we would just shut the project down," said Rich DePonte, president of Navigator Development & Real Estate, which handles sales for Cottage Park and other McRoy-Wilbur Communities. "We're just trying to pay back our lender (Oak Valley Community Bank)."

The first Cottage Park buyers are expected to move in this month.

Fear of having no neighbors

DePonte said it's been hard to attract buyers, in part because "people are worried about being the only ones living there." So Cottage Park has lowered prices: Its homes sell for $190,000 to $240,000, which is about $100,000 less than what the builder originally anticipated.

But there is hope in sight.

A new national tax credit for home buyers was signed into law last week. First-time buyers can collect $8,000 from the federal government, and those who already own a home can get $6,500 to buy another primary residence.

Mothersell is optimistic that the tax credits will coax buyers into considering new homes. To make sure he has homes finished in time for buyers to qualify for the federal incentive, which ends June 30, Mothersell said he will start building houses in Newman right after the holidays.

The California Building Industry Association, meanwhile, is pushing state lawmakers to give new-home buyers additional tax incentives.

This spring, California offered new-home buyers as much as $10,000 in state income tax credits. Those credits were limited to $100 million statewide, and the allocation was used up within four months.

Builders want that new-home tax credit renewed to help bolster California's housing industry.

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