San Elijo Hills area booming?

[psteach]

I had a chance to drive by the San Elijo Hills area via Rancho Santa Fe road today and I was stunned by the number of houses continuing to go up, not to mention what seems to be hundreds more pads being leveled and prepped.

Has that area escaped the downturn? If so, are the builders so confident of continued demand that they’re willing to fill every available square foot of land with a house or apartment? I had assumed from some previous entries here that the development was suffering along with others, but was I wrong?

My wife and I looked at a place in San Elijo Hills proper when it first opened up, but it was beyond our price range (as everything is these days) I appreciate what the builders are trying to do with the community-centered type of development, but these new San Elijo hill “suburbs” don’t even offer that attraction.

I notice these new houses will provide a good chance to experience the free flowing traffic of Rancho Santa Fe Rd. however–an amenity worth lining up for!

[barnaby33]

Every time Rome burns, you gotta get the kindling from somewhere. It just so happens that its SEH and Otay.

Josh

[gn]

If so, are the builders so confident of continued demand that they're willing to fill every available square foot of land with a house or apartment?

The builders already purchased the land & put in the infrastructure (sewage, water, electrical …). They already put too much money in the project to walk away. They have no choice but to press forward.

So, it's not that the builders are "confident of continued demand". It's "if we press forward we'll lose a lot of money, if we walk away we'll lose even more".

 

[drunkle]

i would bet that san elijo has been long bought and paid for. it’s a project that started grading what, 10 years ago? whatever the minor 10% or 20% price “correction”, you’re still talking about price “inflation” of some 300%.

[farbet]

Tax rate in SEH is 1.6%. The .6 is the Mello RoosI believe. With HOA added about 5K per year

[Bugs]

That about sums it all up.

[psteach]

I want to thank all of the above, but especially El Jefe, for explaining what to the layman seems irrational business strategy. Next time I drive through, I feel like I know better what’s going on. This is a great site for an ignorant but interested observer (such as myself) for understanding what’s happening in the area.

[temeculaguy]

Awesome post El Jefe, I think some of the houses being built were decided on a month or two ago in a different credit climate and once the foundation is poured or the framing starts it is cheaper to just finish it and sell it. The lots that haven’t been started yet are being decided on now, especially those where the street hasn’t been paved, that will be more revealing than than the ones actively under construction.

[Alex_angel]

El Jefe, 4S is near complete, not at all in the same situation as SEH or Del Sur. There are only a few developments finishing up in 4S and its done. SEH on the other hand is still in the midst of their plan.

[ocrenter]

mello roos for SEH is .5%

but the base property tax rate is 1.25%

total of 1.75%

a 2500sqft SFR in 2002 there went for $450,000, that’s $7800/year in total property tax, or $2250 of that was the mello roos part.

at the height of the market in 2005 and early 2006, a 2500 sqft SFR went for $800,000, or $14,000/year in total property tax, or $4,000 for the mello roos.

remember, the losers that bought at the top can get the 1.25% part readjusted, but they’ll never going to be able to get the $4,000 in mello roos readjusted.

it is hard enough to part with $7800 split into two lump sums. imagine having to cut a $7000 check twice a year to the county! as the property prices continue to correct, a lot of these homeowners are going to just walk away.

and this effect is not just short term,

years from now regardless of the state of real estate, the buyers are going to ask, is that SEH home you are selling a 2005 model? if you say yes, expect to give some serious discount on that home.

[gn]

Subdivisions sat for almost decade before they were finally built out in 88-89. My gut says that you will see the same thing in 4S and SEH.

El Jefe,

I think that the above statement is more applicable to Del Sur than 4S Ranch. That's because they didn't start building in Del Sur until 2006. Where as, 4S is 75% completed. Am I right ?

 

[Alex_angel]

ocrenter, that $1750 a year extra for mello roos is not going to be a deal breaker if you had a 2005 home that is in pristine shape vs. a 2002 home that needed some work done.

[ocrenter]

alex, that 2002 may be well upgraded with all the trimmings with less neighbors in trouble vs. the 2005 base model with dirt and weed in the backyard.

plus, the 2002 owner can sell for $600,000 and still make out well, the 2005 owner is stuck until the bank foreclose.

and why would you want to pay an extra $1750 a year to use the same exact roads and the same exact facilities when the age of the homes are only 3 years apart?

[Ex-SD]

Alex, there are a LOT of people who will not even look at a home “for sale” that has the Mello Roos tax penalty associated with it. When I lived in SD, I worked with a man who made over $200k a year and managed his money wisely. He and his wife were looking for a home and he wouldn’t even go with the RE agent to look at any property that had the idiotic M.Roos tax. So, don’t assume that everyone, no matter what their income will just hand over an extra $1750 per year for no good reason.

[El Jefe]

I think that the above statement is more applicable to Del Sur than 4S Ranch. That’s because they didn’t start building in Del Sur until 2006. Where as, 4S is 75% completed. Am I right ?

You may very well be corect. I really do not know any particulars about 4S. In fact, I didn’t even know where it was on a map until about 6 months ago. Mmost of my comments were more directed towards SEH as I am much more familiar with the situation there. If 4S is indeed nearly complete, I’d bet dollars to doughnuts that the money has already changed hands for the remainder of the lots and the builders will suck it up and finish building hoping to break even.

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