Focus On Mesa Oaks & Country Club

This week, let's take a look at a couple of our established "executive" communities in our market. I'm sure I'd catch some flak for lumping these two areas together, but that's OK I have a thick skin. I like to look at them together because they tend to appeal to the same buyers for the most part, and they historically track pretty well together.

Mesa Oaks built up over a period of a few decades from the early 1970's up until the first half of the 2000's. These homes are pretty much all custom homes on larger lots - typically a third of an acre and up. And they're typically larger than the average Lompoc tract home, ranging from a little under 2000 sq. ft. up to some in the 4000 sq. ft. range.

The Village Country Club community is just what you'd expect from the name - it's built around a golf course. A very pretty golf course at that. I don't play the game, but any time I'm up there and I see that course, I think I ought to take it up. Just what I need - an expensive hobby. Anyway, this community was built up starting in the early 1960's, and mostly the development stopped there in the late 1980's until recently, when a new tract of home began construction. Again, we're looking at mostly large custom homes on large lots up here. For the purposes of this analysis, I'm excluding the "cluster" homes in the Country Club. Those are attached units, and they really don't track well to anything else, and they kind of constitute their own little micro-market.

The price points in these areas are considerably higher than the rest of the Lompoc Valley. As a result, there isn't as much activity here as there is in the market as a whole. What you'll find for the most part is that as prices increase, there are fewer buyers who can pick up those properties, and things tend to move a little more slowly than they do in the entry level.

We have 15 active and 3 contingent listings on the market in these areas today. Not a lot of these are distressed properties, only 3 are REO's and 3 are short sales. There are 4 pending units (one each REO & short sale). Over the past 3 months, sales activity has been light, with only 2 sold units, with no REO's or short sales. 2008 saw 13 sold units in these neighborhoods, and again, the REO and short sale activity was very light, with only 1 REO and no short sales in that period.

So why is this? Why have these neighborhoods not been hit as hard with REO's and short sales as the rest of the market? It's not about the price point. A lot of newer homes also fall into that price range, and we've seen REO activity in those that tracks pretty closely to the rest of the market. I have a theory, so take this for conjecture and not fact: I think that there hasn't been a lot of turnover in these areas over the past 5 or so years. In fact, just from a very non-scientific observation, it seems to me that most of the homes in these areas are occupied by very long term owners, and most of them have likely not done a lot of cash-out refinancing, so not all that many find themselves in trouble with their mortgages.

Partly as a result of the lack of REO activity in these areas, we haven't seen prices drop here quite as much as they have in the market as a whole. Unfortunately, the data points are very thin, especially recently, so putting a solid number on this is especially difficult. It appears from the data that I do have that values have dropped somewhere in the range of 25% over the past year, which is in line with the larger market. But values have dropped about 40% from the peak, which is about 5-10% better than the market averages.

I think that these neighborhoods will recover nicely when things start to turn around. They are both very desirable neighborhoods, and once the housing market recovers value and we have more entry and mid-range level owners with equity, we'll likely see some of them wanting to make the move up to one of these homes.

Next week I'm going to cover... well, I don't know what I'm going to cover. I'll figure that out later.