Builders Vs 1st/2nd Phase buyers.

sgip

sgip

Well-known member
Every housing downturn pits new home sellers against 1st and 2nd phase buyers who are able to capitalize on significantly higher prices the builders find themselves in phases 3 and on. I saw an example of a listing like this today.

Lennar is building "The Farm" in San Juan Capistrano.
https://www.lennar.com/new-homes/california/la-orange-county/san-juan-capistrano/the-farm

Nice homes, decent area, beach close selling in the 1.8 to 2.3 range right now. They've had their first phase closings in the last 2 weeks or so. Already there are two listings from speculators trying to cash out.

Because the background data isn't yet found in most Title company databases I was only able to find the original purchase price on one of these properties. Congratulations are in order to the sellers of this property:

Phase 1 closed price - $1,595,000. Current list: $2,388,000. Builder is selling these today at $2,200,000 base model so even if this seller pushes the price to $2,100,000 that's a pretty sweet MAXIMUM ROI!!!
https://www.redfin.com/CA/SAN-JUAN-CAPISTRANO/26155-FARM-RD-92675/home/176990808

One thing that surprises me about this tract is the sheer number of ready to close homes. Yes, rates have gone up. Perhaps some fell out because of the turn in the mortgage market. Perhaps some fell out due to recessionary job loss. Given the phase 1 prices versus what the builder has them listed for today, I'd close on the home - job or no job - and still come out way ahead.

When early phase buyers flip their homes, it's very, very difficult for the on-site sales office to compete. At some point they will have to if enough closed buyers begin to put up "For Sale" signs.

Any sign of this going on in the GP? Eastwood? etc?
 
Teresina community has had some and also have a couple right now where buyers purchased through Shea and are now attempting to flip it:

Ones that have already flipped:https://www.redfin.com/CA/Lake-Forest/10-Lontano-92630/home/173432502(purchased for 1.4m sold for 2.05m)https://www.redfin.com/CA/Lake-Forest/10-Alessio-92630/home/172345096(purchased for 1.4m sold for 2.07m)https://www.redfin.com/CA/Lake-Forest/29-Alessio-92630/home/173432452(purchased for 1.4m sold for 2.125m)

Ones in the market:https://www.redfin.com/CA/Lake-Forest/44-Lontano-92630/home/173432499(purchased for 1.47m attempting to sell for 2.96m) https://www.redfin.com/CA/Lake-Forest/20-Luminosa-92630/home/173432426(purchased for 1.57m attempting to sell for 2.35m)https://www.redfin.com/CA/Lake-Forest/17-Luminosa-92630/home/181967077(not sure purchase price as recently closed but most likely in the 1.6-1.8m range trying to sell for 2.5m)https://www.redfin.com/CA/Lake-Forest/19-Ponte-92630/home/180275383(model home selling for 2.95m)

Shea sold most homes in Teresina below market besides view lots which allowed these buyers to flip and profit. One thing to note is the ones that are sold all did landscaping. The ones in the market have no landscaping done besides the model home.
 
Am I crazy or the original owners of 29 Alessio made an opening in the garage wall (photos 2,4 & 19)? That house has some questionable upgrades  :eek:
 
marmott said:
Am I crazy or the original owners of 29 Alessio made an opening in the garage wall (photos 2,4 & 19)? That house has some questionable upgrades  :eek:
Click to expand...
Very questionable. Which is why I was surprised that it sold for that price.

Another thing to factor in is these sellers will all need to pay capital gains taxes. But with the stock market acting the way it is now, might be a good time to offset the gains with their stock losses.
 
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