OK, Once More With Gusto - 4S Ranch

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Submitted by HenryPP on January 22, 2012 - 10:16pm

I am planning on purchasing in 4S sometime this year. This site has several great threads regarding 4S, but I had a couple of somewhat different questions:

1) How come there are so few 4S listed homes in the 2,500 sqft range? MLS has many under 2,000 sqft, and many over 3,000 sqft, but nothing at 2,500 sqft. (Actually, RealtyTrac shows some foreclosures coming up around 2,500 sqft, but who knows when they'll actually hit the MLS).

2) EarlyRetirement and some other posters here have said 4S construction quality is subpar. Can anyone please explain what is meant by this?

3) RealtyTrac shows quite a few 4S homes in various stages of pre-foreclosure and foreclosure. Anyone know when these will hit the MLS? (SD Realtor, maybe you have some insight into this?).

Thanks All!

Submitted by SD Realtor on January 23, 2012 - 7:26am.

Hi Henry

The size distribution of homes in 4S is simply a decision of the builders of what to build. It really is what it is... 4S is characterized by a high housing density where most all of the homes take up a large percentage of the lots. I believe the construction is overall good quality and do not classify it as subpar as others do. Yes there are isolated areas where there were some foundation issues but the vast majority of 4S is good.

While there are going to be continued foreclosures in 4S the bottom for that area came and went awhile back with regards to the 2500-3000 sf homes. I think you will see continued foreclosures there but due to the manipulation in the market with respect to continued low interest rates and other shenanigans we will see fairly poor inventory levels. As to when the properties will hit the MLS it is anyones guess. The path through the default process is as slow as ever and the efforts to keep people in homes is as strong as ever and even more effort will be put forth this year to enable them to stay. If you find something you like and can afford it, then you should probably move on it. If you have a few years to wait then hold off because prices will not start to depreciate until we have interest rate movement that is non trivial.

Submitted by ocrenter on January 23, 2012 - 8:31am.

I second SDR's comments.

Just be sure to look at resales instead of new construction. They are still selling at $700-800k for 3100-3900 sqft homes, adding on MR of 1.9%, simply too pricey for the house and lot you end up getting.

When looking for resales, the south side is a lot better, MR significantly lower and the neighborhood better planned.

Submitted by SD Realtor on January 23, 2012 - 8:38am.

Back at you ocr, I do think that if there is value in 4S I would look at the south side for the reasons you posted. The stock is older and you may need to do some upgrading but if you are gonna plan on staying for the long run, you save alot in recurring fees.

Submitted by HenryPP on January 23, 2012 - 1:36pm.

Thanks OCR and SD Realtor.

I think the really brutal MR is in Del Sur. 4S has high MR, especially north 4S, but it seems mostly less than 1% of purchase price/year.

The thing that really got me was looking at RealtyTrac. The whole of 4S was clusters of the big red dots signifying some stage of the foreclosure process. There look to be about three or four times as many homes in foreclosure as there are listed in the MLS, once you go above 2,000 sqft. And this is for both north 4S and south 4S. Most of these show auction dates from Dec 2011 to Feb 2012. Lord knows when these will hit the MLS.

Actually, considering how over-priced these homes were when they were first built and sold in 2004-2007, I'm almost surprised there aren't more red dots. Here is my best guess as to why it's not a total disaster zone:

Lots of homeowners have kids in local schools, and like the schools and the area. Plus they have good jobs, so >$100K for single-income families, maybe $200K for dual-income. That's enough to continue paying the mortgage if you absolutely refuse to leave and move the kids. Plus there are few good family homes available for rent close by. So even though a lot of these families are probably barely hanging on financially, they are still able to make it by cutting all unnecessary expenses.

Submitted by ocrenter on January 23, 2012 - 3:49pm.

HenryPP wrote:
Thanks OCR and SD Realtor.

I think the really brutal MR is in Del Sur. 4S has high MR, especially north 4S, but it seems mostly less than 1% of purchase price/year.

The thing that really got me was looking at RealtyTrac. The whole of 4S was clusters of the big red dots signifying some stage of the foreclosure process. There look to be about three or four times as many homes in foreclosure as there are listed in the MLS, once you go above 2,000 sqft. And this is for both north 4S and south 4S. Most of these show auction dates from Dec 2011 to Feb 2012. Lord knows when these will hit the MLS.

Actually, considering how over-priced these homes were when they were first built and sold in 2004-2007, I'm almost surprised there aren't more red dots. Here is my best guess as to why it's not a total disaster zone:

Lots of homeowners have kids in local schools, and like the schools and the area. Plus they have good jobs, so >$100K for single-income families, maybe $200K for dual-income. That's enough to continue paying the mortgage if you absolutely refuse to leave and move the kids. Plus there are few good family homes available for rent close by. So even though a lot of these families are probably barely hanging on financially, they are still able to make it by cutting all unnecessary expenses.

4S will continue to see distress for quite some time, especially since banks have taken so long to drag this thing out. A lot of folks in 4S are also in "voluntary house arrest." meaning they are trapped in their overpriced purchases, but they keep up with the payments with the idea that eventually things will turn around. How many will wise up and walk away? there may be a steady trickle of them instead of the really bad areas such as Temecula or Eastlake where things seem so hopeless that walking away is a much easier decision.

But because of the above, this is why it is really important to make sure you get a good price. someone mentioned previously getting a shortsale for $160/sqft 4000 sqft home. That is the type of bargain you have to aim for. At the very least $200/sqft for the smaller homes.

Submitted by earlyretirement on January 23, 2012 - 6:26pm.

Please don't get me wrong. NOT all of 4S Ranch has what I'd deem subpar construction. It was just a few communities driving around. Some of the communities actually had nice looking houses.

But definitely some of the stuff didn't look anything special for the $700s to $800's price tag it had on them.

4S Ranch is such a big area with many homes. So I don't think it's fair to generalize that all are subpar construction because I'm sure it certainly isn't.

Definitely I think if you can find a great deal on a home that you like, now is an OK time to buy if you will stay in the home for the long haul.

Submitted by HenryPP on January 23, 2012 - 8:13pm.

EarlyRetirement,

Thanks for the clarification.

I drove and walked all over 4S today during my lunch break (yes, in the rain). I had not realized just how big 4S really is. Thankfully it was a slow day at work.

At $700K, these 3,000 sqft homes would be WAY over-priced. Even at $600K they're still a bit too high. $550K and they get really interesting. Definitely under $200/sqft.

Well, thanks everyone for your thoughts.

Submitted by maoing on January 23, 2012 - 11:40pm.

High MR in 4S is true, but it also drags down the price, so you end up paying less property tax. For the people with more cash, you can choose to pay off MR, which is many 4S new home buyers are currently doing. The payoff amount is not that bad, for a $5000/year MR home, the payoff amount is about $50K. I know a lot of 4S families have AMT triggered for their tax return, so MR or even property tax is not tax deductible anyway.

Submitted by sdnerd on January 24, 2012 - 12:25am.

HenryPP wrote:
EarlyRetirement,

Thanks for the clarification.

I drove and walked all over 4S today during my lunch break (yes, in the rain). I had not realized just how big 4S really is. Thankfully it was a slow day at work.

At $700K, these 3,000 sqft homes would be WAY over-priced. Even at $600K they're still a bit too high. $550K and they get really interesting. Definitely under $200/sqft.

Well, thanks everyone for your thoughts.

I purchased new construction in Northern 4S a little over a year ago ~$200/sqft.

Here's my take from what I've seen actually living here.

In the Northern side, all the new construction (and there has been a lot of it, and more still going) is being purchased by people putting 20-50% down. At today's rates, that puts mortgages in the $2-3,000 range for 3,500sq/ft+ homes. I don't think you are going to see much distress there, and this price point appears to be extremely attractive.

In the Southern side, a lot of it was purchased before prices went to the moon. Fair amount of staying power.

The areas that were built during the crazy days got slammed a few years ago (4ClosureRanch). There's been a lot of strong hands taking over for the weak. I'm sure there is more distress, but I believe the opportunity to really get a huge price reduction has mostly passed.

A lot of dual income high earning families, what appears to be a pretty attractive price point based on sales/demand, and low interest rates for the foreseeable future.

For someone looking for nice home in a good school district, that plans on staying there for many years IMHO it's a pretty safe bet.

Submitted by 2012 turns around on February 9, 2012 - 1:59pm.

Agree with the replies in general. So should not paint the entire 4S with the same brush wrt the build quality. Davidson built homes in the north are noteworthy - some good floorplans and impressive front facades. Saw this http://www.ziprealty.com/property/10234-... and definitely worth considering if you're hunting for a deal. Myself closed a shortsale in the same davidson community for a >169/sqft for a 4000+ home built in 2005 - and am very happy with it.

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