Home Front

A blog about the economy and the Sacramento-area real estate market.

October 2, 2008
Southern California's Pardee Homes surrenders in Natomas

ACW PARDEE HOMES 1.JPG   Sacramento Bee/Anne Chadwick Williams (in June 2007 as Pardee Homes was readying Natomas Meadows for the Los Angeles builder's grand debut in Sacramento).


   Pardee Homes has had the greatest of runs in Southern California, successfully surfing the waves of growth that built Los Angeles and San Diego and all their surroundings.


 But the builder has always seemed cursed in Northern California.

 Last week it sold 637 lots on 100 acres north of downtown Sacramento at its first big project in the capital city: Natomas Meadows. Its third time north of the Tehachapis has again proved to be something like the Boston Red Sox trying for decades to win a World Series.

 Pardee  tried to get in on the 1970s boom near San Jose and withdrew after unsatisfactory results. Thirty years later in 2005 it tried again in Livermore, spending $3 million to convince voters to expand their urban growth boundaries for 2,450 solar-powered homes. They said no. Not just no, but no by 72 percent of the ballots cast. That ended that dream. But by then Pardee had already come into the booming, growth-friendly Sacramento-Stockton market.
 
   In 2004, the firm plunked down more than $150 million for land and improvements at the very height of the land boom then sweeping the Central Valley. It bought land to build more than 600 homes in Natomas, 1,100 in Rancho Cordova's Sunrise Douglas area and 2,200 homes on the north side of Stockton. It also started up a new Sacramento division.
 
And then came the downturn. (Cue in the scary music here).

 Pardee built eight model homes at Natomas Meadows as the market was getting worse and worse. It opened them with balloons and fanfare. It touted its long Southern California/Las Vegas reputation as one of the West's top green builders.


The market here in Sacramento then soured so quickly that Pardee decided it couldn't sell at prices good enough to recoup the boom-era price it paid for land. So it fenced off Natomas Meadows and shut it all down.

Last week it sold the unbuilt lots to Granite Bay Development, a relatively new developer run by Clay Loomis, a former engineer and executive with Seattle-based developer/consultant Triad Associates. Loomis said his firm has no debts and cash on its hands, and is looking for other land buying opportunities now in Sacramento and Nevada.

Plans are to sell lots at Natomas Meadows to home builders in two or three years when Natomas gets past its upcoming building moratorium over those levees. By then Loomis thinks the market will be back.

In the meantime, Pardee is still building its 135-unit apartment complex at Natomas Meadows. It's holding onto the land in Rancho Cordova and Stockton to see what the market brings in years to come. But once again, Northern California has proved a tough nut for a company that has built much of Southern California with hardly a hitch.

Someday, meanwhile, those eight model homes will reopen, and  what a party that will be.


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