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Sunday, Mar. 08, 2009

New Bibb subdivisions stall or fail as housing crisis persists

Some subdivisions are like neighborhoods for ghosts.

You may drive down finished roads beneath street lights, past empty lots. You might even pass a house or two.

But nobody’s home.

Other subdivisions may be half full of occupied homes with picture-window views of rubble.

These roads are the dead end of the building boom that swept the country over the past decade. When the housing-driven economic downturn took a nosedive last fall, some Bibb County residential developments faltered and failed.

And new home construction became rare: Housing permits in 2008 dropped to 180, about a quarter of the number issued at the height of the construction surge in 2005.

“The economy has taken a heavy, heavy toll on all the new construction in Bibb County,” said Barbara Woodward, a real estate agent with Connie Ham Middle Georgia Realty.

“Banks aren’t making construction loans. Buyers can’t get mortgage loans,” she said. “Unless you’re the rare person who’s sitting on a lot of cash, you’re not going to expose yourself any more.”

Most builders and real estate agents agree that Macon was insulated from the worst of the bust that staggered sprawling cities such as Atlanta. But Macon’s proximity made it an attractive expansion market to some Atlanta megadevelopers. When they went bankrupt or lost subdivisions to foreclosure, the ripples traveled down Interstate 75.

In some cases, residents who moved into these subdivisions will face depressed housing values because of the half-developed surrounding land and banks’ need to unload foreclosed subdivisions.

“With the foreclosures on the new construction, banks are willing to take substantial hits to get it off their books,” Woodward said. “So those that bought their homes at full value, they’re pretty much out of luck.”

That’s a fear of Clara Hawthorne, who bought a house at full price in The Highlands off Mumford Road. There, developer Sivica/Highlands Development left houses and town homes half built and acres of red dirt. Residents and county officials say that until recently, erosion threatened to destabilize the streets.

Sivica officials did not return repeated phone calls to their offices, homes and attorneys.

“I don’t see us selling our house for what we paid for it in the next three to five years,” Hawthorne said.

FORECLOSURES AND BANKRUPTCY

Subdivisions from Goodall Mill Road in south Bibb to Bass Road in the north were crippled by the downturn.

Jonesboro-based R&B Construction was developing Royal Estates in Macon and Goodall Woods in south Bibb, both of which already include dozens of homes. The company had also started clearing land for the development of a new subdivision, Shirley Oaks, off Thomaston Road. The company Web site says R&B is building 35 neighborhoods in Georgia, Alabama and northwest Florida.

R&B’s Web site still advertises, “When you buy a home in Royal Estates, you will be living as royalty.” But many of the homes now circle a central, undeveloped portion dominated by weeds, clay and construction rubble.

The company filed for Chapter 11 bankruptcy protection a year ago.

R&B partners Rollin Rockett and Brandon Robertson did not return repeated phone calls.

Heritage Bank foreclosed on 10 lots in Goodall Woods as well as the Shirley Oaks land, said Michael Kerr, group vice president. Last month, FirstCity Bank advertised the sale of 16 lots in Royal Estates to secure debt owed by R&B.

“Houses were selling in both subdivisions very well until the economy took a nosedive,” Woodward said.

But six vacant homes remained for sale in Royal Estates as of February, she said.

“There’s a lot of vandalism by local teens in them,” she said. “We try to control it and can’t. The builder will repair them when they come under contract.”

Royal Estates is not the only unfinished subdivision in the Thomaston Road area. Another is Northridge, which was being developed by Elijah Enterprises Development Group Inc. and Peach Developers Inc., both of the same Union City address.

Branch Banking and Trust Co. advertised in The Telegraph the foreclosure sale of most Northridge lots last month to pay debts owed by both Peach Developers and Elijah Enterprises. First State Bank confirmed that it foreclosed last month on properties owned by the same companies, including their Union City offices.

Bibb County deed records show many liens on Elijah Enterprises property.

In the mixed-use Providence subdivision off Bass Road, builder Bob Adams Homes of Tyrone lost about 40 lots to Bank of North Georgia in a foreclosure last year, according to bank officials and Bibb County Superior Court records.

Most lots in Providence are bought from the developer by builders who team up to reduce their financial risk, said Jimmy Ballard, who markets the properties.

But he said Adams bought the entire neighborhood of Carillon Park at Providence.

John Kilgore, with Coldwell Banker realtors, said “the perfect storm hit” to sink Carillon Park: Adams was marketing homes to retirees who wanted to sell their longtime homes and use the proceeds to buy new. But they couldn’t find buyers because banks weren’t lending money.

This is a symptom of the larger housing and financial crisis. But in some cases, developers’ financial problems seem to predate the market downfall. Many liens were filed against companies such as Alpharetta-based Highland Development LLC and Sivica starting in 2005.

Although Macon-based ventures have generally fared better than their Atlanta counterparts, there are some exceptions. Wayne Bullington Construction of Macon and related company Cypress Lakes Builders LLC faced a series of liens from contractors and suppliers, Bibb deed records show.

In October, Magnolia State Bank foreclosed on the 37 acres intended to become Cypress Lakes subdivision near Lake Tobesofkee. Atlantic Southern Bank and Colonial Bank also foreclosed on some properties owned by Bullington’s companies, according to Bibb deed records.

Bullington, CEO of Bullington Construction and agent for Cypress Lakes Builders, did not return repeated phone calls.

INCHING FORWARD

Many residential developments that haven’t failed are on hold.

Hartley Properties has “roughed in” roads and installed utilities in one residential subdivision of its larger Hartley Station project, said partner Steve Smith. But the company is waiting to finish the work because of the scarcity of builders ready to buy lots. Hartley Properties maintains financial balance by focusing on the commercial portion of the development, Smith said.

Bibb County Superior Court records show that some liens have been placed against portions of the property by contractors. But Smith said the company’s bank has been working with it and “we’ll weather the storm.”

The Treetops, a new subdivision being built on Mosely-Dixon Road, will have 32 lots available soon, said Hal Williams, vice president of construction for The Mulberry Group. But the company is rethinking its original plan of seeking builders to construct homes and of continuing immediately into a second phase with more lots, he said.

Carreker Construction of Locust Grove is finishing initial development of Shirley Oaks for Heritage Bank, which plans to then sell the property to a builder or investor, Kerr said.

Carreker is also developing 67 lots in the first phase of The Woods at Ocala on Vinson Road. Jeff Carreker, president of the company, said he has built and sold five homes there since September. When the economy slows down, Carreker said he responds by upgrading home features and dropping home prices.

POSITIVE SIGNS

SF Communities, the only local development and building company that says it’s booming, markets “minimansions” on signs that declare “Bigger is better!”

“Last year in the worst market there was in Macon, we sold 60 houses,” said Jim Frith, who acts as developer while his son Sean builds the homes. Sean Frith is a former vice president for Sivica who helped get The Highlands off the ground.

“It looks like we’re probably going to sell 150 houses this year,” Jim Frith said. “When you hear all the sad stories now, that’s not us.”

The company received about 50 of the 180 building permits issued in Bibb County in 2008, said Ben Cheney with Macon’s Department of Inspections and Fees.

Most of those homes are being built in Wheeler’s Landing off Chestney Road or in Beaumont Heights on Williamson Road. The company is also building Liberty Church Estates, plus a subdivision in Milledgeville and two in Putnam County, Jim Frith said.

SF Communities recently began buying lots in Warner Robins subdivisions, such as Estates at Lake Joy Road, from developers who are struggling.

The Friths say they have approached Security Bank about buying the remaining lots in The Highlands. (Although the bank has a financial interest in them, it doesn’t own them, bank spokesman Tom Woodbery told The Telegraph.)

Jim Frith says SF Communities can stay ahead of the recession because he and his wife have a 20-year flow of cash from people paying off the purchase of lots in trailer parks the Friths built and financed directly. Jim Frith deposits the cash with banks to persuade them to lend money for speculative houses.

In addition, SF Communities has been able to keep prices low for two reasons: The land was purchased cheaply years ago, and Sean Frith gets deals on building materials because of his experience and the volume he buys, Jim Frith said.

The savings mean the company can afford to make only a small profit on each house, as long as it sells lots of houses.

“For the last 10 years. ... a developer could get any reasonable cost they wanted. The price matters more today,” Sean Frith said, adding, “It’s a bloodbath.”

Ballard said houses costing more than about $230,000 sell slowest right now.

But “lower end” property is being purchased by investors, Woodward said. “There are really a lot of scavengers out there who are bottom feeders,” she said.

But she, Ballard and Kilgore say they see the beginnings of a broader recovery. “I’ve seen a tremendous increase in showing activity and contracts over the last two weeks,” Kilgore said in mid-February.

Ballard said the stimulus package recently passed by Congress, with its rebates for first-time home-buyers, will help.

Home values will rebound, Woodward said.

“We’ve had a major correction and one that was probably, in some ways, needed,” she said. “But everything converged at one time, so the pain is a lot broader and deeper.”

To contact writer S. Heather Duncan, call 744-4225.