Real Estate

Neighbors fret as houses hit auction

MANTECA -- Dave Cantrell is upset.

It isn't because his house is worth less than when he bought it from Anderson Homes a year ago. He figures that's the market.

It's that the company, left with a glut of homes, has changed its approach to selling them: It's auctioning off new homes in the Paseo West neighborhood.

On Oct. 13, opening bids will start at $285,000 for a four-bedroom, two-bath home once priced at $460,898. Of the 63 empty houses, 34 of them will be auctioned.

"We feel we were betrayed," Cantrell said of himself and the other homeowners who found out through an advertising blitz. "Anderson didn't talk to us ahead of time. There are only 26 of us, so it wouldn't have been that hard to do."

An Anderson official said there are 27 homeowners in the neighborhood. He defended the auction as an appropriate way to attract interest.

"You can pick up the paper every day and see what is happening in the financial and real estate markets," said Craig Barton, chief financial officer of Lodi-based Anderson Homes. "We have people coming in with some level of interest in buying a home but with no level of urgency, and we felt an auction is a very efficient and proactive way to reduce our inventory. It's as simple as that."

Cantrell acknowledged there is little the protesting homeowners can do. They signed agreements when they bought their houses allowing future homes to sell at auction. A neighborhood meeting Sept. 28 with Anderson representatives ended fruitlessly. Neighbors then sent a letter seeking $20,000 per house- hold as compensation, a measure the company rejected.

Disappointment across region

The disappointment of these homeowners is likely to be repeated in subdivisions across the region as struggling developers step up incentives to lure buyers of new homes.

Last weekend, 22 town houses in West Sacramento were auctioned off after the builder had managed to sell just three since putting them on the market late last year.

Kennedy Wilson Auction Group, the company conducting the Paseo West auction, has others scheduled for new homes in Los Banos, Elk Grove, Pinole and San Pablo.

It's the first time Anderson has sold houses at auction, and Barton said he doesn't know what the homes will sell for. The auction should provide a gauge for the market price for new homes.

Paseo West has looked like a ghost village over past months. More homes are empty than occupied. Signs in the windows note the floor plan inside.

Barton said his company has as much interest as anyone in seeing neighborhood values stabilize because it has approval to build an additional 59 homes in the subdivision.

"We think in the long term, putting 34 families in those homes will be a win," he said. "It will be good for the community in the long run. Empty houses are not usually appealing."

In the short term, he said, the company "is going to take the hit, whatever that might be, on the houses at the auction."

The auction will change who can buy a home in Paseo West; those who already purchased their house had to agree to live in them, but that rule won't apply to buyers at the auction. They will be allowed to buy more than one.

So investors could scoop up homes and move in renters, Cantrell said.

"It's not that I have anything against renters; I was a renter at one point, and I've seen great renters, but all of these homeowners have spent tens of thousands of dollars turning their house into a home with upgrades mostly in landscaping," Cantrell said, estimating his investment at $100,000 including his pool. "It's going to give the neighborhood a different feel."

Spending time and money to landscape and furnish the house was part of the appeal for Bhajan Singh, 46, who bought his house in August. He worries that those who purchase the homes for less money won't be able to afford the upkeep of a large home.

"When we moved here, we trusted them to give a proper environment," Singh said. "The concept of the neighborhood was part of the selling points and if they (knew they) were going to have an auction, they should have told us."

Cantrell, who works in the development business, said developers had other options: They could have offered more upgrades or a free sports car while keeping prices higher.

Last month, national home builder K. Hovnanian Homes reported selling 47 houses in the Sacramento area on an offer to fully furnish each house.

"We considered all sorts of alternatives," Barton said. "We intend to be building in this market for a long time so we didn't come to this decision without giving it lots of thought, but I definitely understand how they feel. I can't change how they feel."

Bee staff writer Inga Miller can be reached at imiller@modbee.com or 599-8760.

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