Pardee homes, Party is over.

PARDEE HOMES development in Moorpark just dropped their Mello-Roos for any homes closed after Jan. 1st 2007. This a significant blow to those people who had already purchased homes, as they are obligated to pay between $4,900 to $6,000 a year for 30 years. The resale value of homes with Mello-Roos versus those without will be significantly different. Some quotes in today Ventura-Star:

The house was unfinished, but Ann and Rusty Colemon closed the deal for their new Moorpark Highlands home anyway in December. In exchange for signing before the end of the year, they say builder Pardee Homes offered them nicer fixtures and no mortgage payments until the house is finished.
But if they had waited a few days for a special assessment to be waived, they would have saved about $150,000.

"We would have waited to close if we'd known," Ann Cole-mon said. "It's very hurtful that they had this knowledge and did not disclose this to us."
The Colemons are among dozens of 2006 homebuyers in the Moorpark Highlands neighborhood who are upset about Pardee Homes' new incentive for buyers there. As of Jan. 1, Moorpark Highlands purchasers won't have to pay the monthly charge known as a Mello-Roos assessment, which funds community improvements in the tract. Instead, Pardee will cover the cost.
Those who bought before Jan. 1, however, still must pay the assessment, which they said can run between $4,900 and $6,000 annually depending on a home's size, for more than 30 years.

New home developers traditionally try and not reduce prices in their developments during slow times, because they will affect the resale value of everyone that has purchased before them. The list price shown on the tax rolls remains unaffected, but there will be a significant divide between homes in the developments with Mello-Roos and without.

Moorpark Highlands was the first new home development I visited in my home shopping experience back in March of 2006. Back then, the sales staff barely acknowledge the visitors, never getting off their stools to hand out brochures and fliers. I visited the houses with great interest as, relative to the market at the time, 650-700k seemed like a pretty good deal for a new home. After looking at the houses I asked the sales staff a few questions, "Do you work with real estate agents?" (Absolutely not, was the reply), "If I am interested in buying a home, what is the next step?" (Throw a couple forms at me and send me on my way). Now, I didn't exactly expect them to fellate me when asking about purchasing their homes, but I would expect a sales person to do some salesmanship to people showing interest in their homes.

I went home and crunched the numbers and rapidly came to realize that between HOA dues ($250+), landscape tax (~$1,500), and Mello-Roos ($4,500-6,000) it would be a better value to buy a $800k resale home (yearly it came out the same amount) or save the money and buy a 650k resale home. But I thought Pardee must really be selling a lot of houses because the sales staff was doing so little. Arrogance is prevalent during the good times. About once a month I went by the development and it seemed foot traffic was still ok, sales staff still unmotivated, and in general nothing changed. But watching their website and emails, someone at the head office was clearly getting nervous. You will now see a 3% broker coop being offered (trying to draw buyers off the existing home sales market by giving a broker split to real estate agents), and many incentives, financing, giveaways, and offers coming in your mailbox. One only has to look to Florida, Las Vegas, and Phoenix to see what happens when a developer gets motivated to move homes. Previous buyers are left out in the cold, with new buyers getting upgraded houses, lots, and financing which ultimately makes their houses worth more when going to sell them again.

Last November was the final time I visited Moorpark Highlands, It was during a weekend where they were giving away a free refrigerator and television with each purchase. At Shenandoah I actually had one sales person mention that she was trying to give away a TV and that we should buy. It might be a small thing, but at least their was SOME sort of salesmanship going on (even if it was only one person) after several months and many visits. Personally, I think with the market being as soft as it is, the position of the houses in Moorpark (not a great area), and how far the development is from job centers relative to price, I think the next step is a list price reduction. If you look at the history they have gone from offering nothing to offering broker coop, adding upgrades, giveaways, "creative" financing, and dropping Mello-Roos, it seems they are running out of room of things to do to move homes.

Maybe another trip to Moorpark is in order, I will keep you updated.