Developers Resuscitate Abandoned Home Sites In A Sign Of New Housing Boom
Half-finished subdivisions get their chance to shine nine years after the housing crash.
When McMansions started making a comeback a couple of years ago, and house flipping did more gyrations than an Olympic gymnast, it was only a matter of time before those long abandoned luxury single family home developments were resurrected as well. With ostentatious country club names like Mountain Creek or Whispering Willow, half-finished sites that were left for dead during the financial meltdown have been cleaned up, financed and re-branded. The sound of bulldozers and nail guns is once again accompanying mortgage approvals from buyers, whose amnesia is leading them to buy more house than they probably should. After all, why have four bedrooms when you have seven?
According to the Wall Street Journal, a shortage in available lots (It’s harder to get a loan for acreage than it was during the boom years prior to 2008) has led developers to breathe life into crumbling sites that were left to rot after the housing collapse in 2008. Eight years is a long time for any home to fester, especially modern ones built from plywood, pine framing, and vinyl siding. But it’s turning into big business for eagle-eyed investment funds.
The Journal profiled Australian firm Drapac Capital Partners, who visited the derelict Cameron Springs subdivision in Cobb County, Ga., in 2012. Only a fraction of the homes were completed. Drapac bought the 101 remaining lots in the neighborhood for $375,000 and spent about $550,000 finishing half-built lots and upgrading the pool and clubhouse. Their investors should thank them. Drapac received 12 bids last summer for the neighborhood, eventually selling it to national builder D.R. Horton Inc. for $6 million.
It’s a pattern than happening around the country.
“I think they’re all panicking,” said Sebastian Drapac, chief operating officer of Drapac Capital Partners. The company has purchased more than 25,000 lots in abandoned developments across the U.S. since 2011. “They’re trying to get lot positions wherever they can.”
Even Nevada, probably the area hit worst by the 2008 collapse, is seeing shoots of green emerge through the cracked concrete on its thousands of abandoned homes. Coyote Springs was supposed to be a 43,000-acre community—a city built from scratch in the middle of nowhere during the boom years. The developers heralded its potential—”without the negatives of traffic and crime found in Las Vegas.” But the bust crippled it and business partners turned on one another like coyotes.
Figurehead, former powerhouse lobbyist and current prison inmate Harvey Whittemore, launched the project before jail time beckoned. Now, according to VegasInc, his former partners, the Seeno family of the San Francisco Bay Area, recently gained full control of the property through a legal settlement and have approvals to build as many as 159,600 homes and more than 10,000 acres of commercial property.
Unlike before, though, a more restrained construction timetable is scheduled for the development which will be nearly twice the size of Las Vegas’ largest master-planned community—Summerlin. If all goes as planned, it would easily take 50 or 60 years, if not longer, to complete the project, “barring some sort of crazy boom” that no one expects, general counsel Emilia Cargill said. Good to know.
With $100 million already spent on Coyote Springs, the Seenos have water rights and electricity, and will complete utility work (water-treatment and wastewater-treatment plants) before parceling it out to developers. Whether they will bite or not is yet to be seen.
Part of the appeal for redeveloping abandoned home sites is because neighborhoods have already been laid out and approved. With interest rates still low, and credit available, demand for single family homes is on the rise as is their size. According to data from the U.S. Census Bureau, the size of new American homes has been on the rise since hitting a low point in late 2009, when they bottomed out at roughly 2,050 square feet. Also on the rise is the value of McMansions, particularly in the South, says NuWire Investor. A new development of super-sized homes? Whatever next, the return of the Hummer?
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