Homeowners’ Revolt in Desert : Real estate: Antelope Valley residents protest huge price cuts on new tract houses, demand rebates from developers.
Only a few months after moving into new homes in the Antelope Valley, Tom Schreiber and many others like him say they ought to be concentrating on tending yards, building patios and the other supposed joys of home ownership.
Instead, they say, they are anguishing over how the developers who built their houses are now selling the same ones, sometimes next door, for as much as $50,000 less than what they paid. And that anguish is spurring Schreiber and others to demand some of their money back.
“I feel pretty bad. I feel like I’ve been wiped out. I’m back to square one, like I was back in college,” said Schreiber, 36, an aerospace worker who put his life savings into a new $245,000 house, only to have the price cuts erase his equity. The same model now sells for $196,000.
Although a downturn in the housing market exists throughout Southern California, housing industry officials say the high desert is the only place they know of where residents who bought at the market’s peak are demanding that developers reimburse them the amount of recent price cuts.
In recent weeks, dozens of homeowners in at least four tracts in the Quartz Hill area, a relatively pricey community west of Lancaster, have asked for money back, to no avail. Angry homeowners have picketed the sales offices at two of those tracts, and some residents are threatening lawsuits.
The Kaufman and Broad Home Corp., one of the state’s largest home builders, hoping to avoid such protests, gave at least nine buyers in their California Chateau project in Quartz Hill rebates worth $13,000 to $15,000.
The rebates were doled out to existing homeowners after the developer decided to try to entice new buyers with offers of valuable upgrade packages that gave them more for the money. Even those upgrades--more elaborate landscaping, fancier tile, more fashionable window treatments--failed to spur sales of the homes, costing up to $325,000. The developer ended up selling off lots with only foundations.
Stuart Greene, president of the Antelope Valley Building Industry Assn., said that market swings affect developers as much as homeowners, and drastic price cuts are a move of last resort.
“It costs us a great deal of money to carry homes,” he said. “It has nothing to do with profit, but . . . survival.”
The rebate demands, picketing and sharp drops in builders’ asking prices in some Antelope Valley areas are all signs that the new home market there, the largest and most affordable in the county, has been hit unusually hard by the state’s broader downturn in housing.
Real estate experts say that is the result of an unusual and unfortunate set of local events.
Hefty increases in city development fees approved by the cities of Palmdale and Lancaster last fall caused developers to rush hundreds of new homes onto the market, just as the statewide slowdown was taking hold.
That slump, along with already high home prices in the San Fernando Valley, left many residents unable to sell and trade up to more expensive homes in the high desert, cutting the demand for homes in the market’s top rung. At the same time, several years of double-digit price increases made even lower-priced homes in the Antelope Valley less affordable for first-time buyers.
The impact of the housing glut and the shortage of buyers led to frenzied competition among builders that caused them first to offer incentives and then to cut prices. That touched off a furor among those who paid much higher prices last fall. Some real estate experts also partly blamed builders for panicking.
Housing officials said they know of nowhere else in the county where the housing slowdown has caused such turmoil. They said other fast-growing areas, such as the Santa Clarita Valley and Calabasas, seem to have fared better because fewer new homes are on the market and fewer developers compete for buyers.
While the Quartz Hill area has suffered the deepest price cuts, people who struggled to buy fast-moving homes in Lancaster and Palmdale last year are now finding new buyers enticed with offers of free cars, swimming pools, vacations, upgrades or financing packages.
According to real estate experts, the new home market in the Antelope Valley, which consists of about 150 separate projects, the most in the county, became a victim of its own size, success and, to some extent, bad timing. Some homeowners said that developers raised prices too high, too fast.
“It was two to three years of progressive great times. But when it fails, it fails fast,” said Eric Brown, an Encino-based vice president with the Meyers Group, a real estate consulting firm. He said the Antelope Valley’s new home market has been harder hit than any other in Southern California.
This spring, the median price of homes in the Antelope Valley was about $153,000, compared to about $300,000 in the San Fernando Valley. New home sales in the high desert dropped from nearly 1,600 from March through May of last year to just under 600 for the same period this year.
At the same time, the number of unsold new homes in the high desert skyrocketed from just under 300 last May to more than 2,500 this May. At the current rate of sales, with no new homes built, that is a 55-week supply, according to the Meyers Group.
Builders valleywide have had to lay off employees and executives, some as much as half of their work force, said Greene, a senior vice president with Pacifica Corp., a Westlake Village-based developer. Auctions of homes and even sales of partially built ones have been held.
But developers get no sympathy from Schreiber, a former test pilot who works for Lockheed and lives in one of Pacifica’s tracts, Steeple Hill.
Housing industry officials and lenders have urged those in Schreiber’s situation to wait for the market to recover. Banks and other lending institutions say California still has perhaps the nation’s strongest real estate market, and they are not fearful of owners defaulting.
But angry residents say they have been permanently damaged and will always be at a disadvantage, compared to neighbors who bought for substantially less. Some also complain that they cannot get equity loans, and some, such as Schreiber, whose job has been moved to Georgia, say they can’t wait.
In addition to Schreiber’s tract, demands for rebates in recent weeks have come at Griffin Homes’ Quartz Hill project and Cambridge Development’s Cambridge on the Hill tract, where residents have picketed, and Watt America’s Highlands project.