I’m a commercial appraiser (since 1985) and I also do some residential appraisal review work for one of the nation’s biggest banks. I’ve been working in SD County since 1990 and worked in the OC/LA areas prior to that. I also develop and teach continuing education courses for appraisers.

I’ve reviewed a number of appraisals from the different “communities” in Bressi Ranch, including Heather Court. In the last 3 weeks I’ve reviewed 2 appraisals for purchases from there; one in the “Cassia” project and another in the “Canterbury” project.

By my count there have been 10 sales at $890k and above in Heather Court, the highest two being the models for the project, both of which sold back in 02/2005. In the beginning of the project, back in early-mid 2005, they were selling the 3019 SqFt model in the $800k+ ranges, with most of the sales closing in the mid-800s. The three yr2006 sales have closed at $834k and $757k (01/2006), and at $729k (03/2006). Keep in mind that these closing prices are greatly influenced by the levels of options and upgrades chosen. For example, the model homes always sell with every possible option, including landscaping and patios, window coverings, artwork, rugs, and sometimes furnishings. This is the reason why there is such a big spread in these new projects for otherwise similar homes. Ironically, it’s been my experience that after about 5 years or so, the premiums paid by the original buyers tend to basically disappear in the resale market. In my opinion, options and upgrades are a huge “profit center” for the developers, if you catch my meaning.

The lower 01/2006 and 03/2006 closed sales are a good $70k lower than the previous low sales in 05/2005. That $70k doesn’t even represent a 10% reduction, though. While it would seem to be a little quick for such a big markdown, I’m not particularly surprised because I’ve seen it go like this before. I knew it was going to happen sooner or later, and by my reckoning it’s going to get a lot worse as time goes on – we ain’t seen nothing yet.

Speaking for myself, I wouldn’t want to be one of the yr2005 buyers right now. Based on their recorded financing and considering it costs money to sell, it looks like about half of them effectively have no equity right now. I sincerely hope they all have staying power.