Birtcher Homes to Bid 1st Project--a Foreclosure
Fledgling Birtcher Homes may have found a perfect opportunity for breaking into the residential real estate market: For sale at a discount are 185 acres of well-located land here.
Birtcher Real Estate Inc., a Laguna Niguel-based commercial developer, decided to branch into residential building last year, when the recession made diversification an appealing safety net. The newly created Birtcher Homes has been looking for a first project since then.
Next Tuesday, 700 vacant lots in the planned community of Pacific Hills are scheduled for the auction block in a foreclosure sale. And Birtcher Homes plans to be among the bidders.
“It would be an outstanding way to enter the residential field,” said Frank Scardina, president of Birtcher Homes.
The lots make up the last remaining parcel of land in Pacific Hills, a 1,500-home development begun in the mid-1980s by Barratt American and Home Capital Corp.--the real estate arm of HomeFed Bank, a troubled thrift in San Diego. Barratt, which was under contract to Home Capital, does not have a financial stake in the property.
Home Capital last fall stopped making payments to its lender, Bank of California, after running into difficulty selling the lots. “There has been very little financing available for builders to buy land,” said Don Faye, director of project operations for Home Capital.
Faye said the company is discussing alternatives to foreclosure with Bank of California. “It would not surprise me to see the foreclosure sale date postponed,” he said.
One option under consideration, he added, is for Home Capital to sell its interest in the land to a home builder.
Meanwhile, Birtcher Homes and other home builders have been talking with the bank about buying the property. Fieldstone Corp., Lewis Homes and Standard Pacific are among those who have expressed interest, said Jeff Meyers, president of the Meyers Group, a Newport Beach real estate consulting firm.
It’s no wonder the land is so in demand, Meyers said: Lots once priced at $125,000 to $130,000 will now go for about $75,000 to $90,000.
Also, the property is ideally situated, within a mile of Interstate 5, and comes complete with grading and streets.
“Builders today are in search of this kind of property,” Meyers said. “It’s almost impossible to get an acquisition and development loan.”
Another bonus in buying finished land, he said, is that the developer bypasses the time-consuming and costly entitlement process through which local governments approve property for residential building.
The 800 existing homes in Pacific Hills were move-up, luxury houses that started at about $300,000 and went as high as $450,000. Given today’s housing market, whoever ends up with the property will probably build smaller homes selling for $200,000 to $325,000, Meyers said.
