08 August 2010

The Elements of Success?

From the ashes of Pine Valley Estates, the 98-unit executive home tract development on the Chino Hills side of Carbon Canyon that opened a few years back, rises a would-be phoenix* called Elements by Warmington, which is mounting its grand opening this weekend.  A post on this blog from 5 October 2009 discussed the transition from Meritage to Warmington and the scaled-down plans announced therefrom.

Elements features smaller homes at prices greatly reduced from the late boom period high offered by PVE.  Three model homes, all with four bedrooms and three or three-and-a-half baths (as configured in the standard floor plans, with options for up to six bedrooms and five baths), are attractive enough with some interesting options, such as kitchen prep areas, offices and even, in the larger model, a guest suite with a separate living room, as well as a bedroom and bath.  Square footage runs from under 2,900 to about 3,500 and there is no average lot size given, but they generally appear to be about 8-9,000 square feet or so.

Model 1 with four bedrooms and three-and-a-half baths at 2,897 square feet starts at about $702,000.   The second one has a 4/3 layout at 3,025 sf and is listed at about $736,000.  The third offering is also 4/3.5 and is at 3,302 sf for $805,000.

As noted in the October entry, Warmington purchased the remaining 56 of the 98 lots comprising the late, lamented (!) PVE enterprise.  Obviously, the company assumes that the smaller homes and more affordability (?) of the new Elements offering will attract buyers.  And, that may all very well be true.  However . . .

Outside of those in the banking and financial services sector and, perhaps, a few select professions and a small array of anomalies out there, the economy has hardly made "progress" for some 98% of us Americans since last fall.  Excepting those who have made money with the rise in the stock market accompanying the hoarding of cash by financial instituitions, many of which received taxpayer money in the form of TARP and other stimulus programs that they then were permitted to hoard and those enjoying the residual effects therefrom, there are no real signs of improvement.

Unemployment is still 9.5% nationally and around 11-12% in California (excepting those not looking for jobs, but who don't have them--which really means that somewhere around 20-25% of Americans are actually unemployed.)  This will grow with the end of temporary census jobs and other manifestations of attrition and most economists see no change in employment for a year or two at the earliest.

Sure, mortgage rates are at historical lows, but who is eligible to receive them?  Well, there are those who were lucky (or canny) enough to amass equity in the insanity of the last boom and can sell their existing home in this feeble housing market or those extremely rare first-time buyers who can put down a couple hundred thou and be able to take on a mortgage of a half-mil or those looking to refinance who have the magical combination of factors that allow them to do so.

So, there may be 56 families out there who fall in one or more (well, two) of these categories who will buy an Elements home, but it will sure be interesting to see how long the process of selling these residences will take.  Even if, Elements were to sell out in relatively short order, it would, by no means, be representative of the housing market as it exists in the last half of 2010.

Because, we're now at least thirty years into an era in which depressed, stagnant, or insufficiently increased wages were the reality for most Americans, while housing prices (along with much else, adjusted for inflation) rose higher than wages.  Ergo, the only way most home "buyers" could "afford" a house to fulfill the "American Dream" in an economy that relies for consumer spending for 70% of its existence was to take on ridiculous levels of debt.  And, the skyrocketing effect of personal debt seems to correspond in synchronicity with our national debt precisely as the income gap has risen to its highest (read: not good) levels since the 1920s.

As for Carbon Canyon, the distressed economy at the very least means a delay in the continuing effort to dismantle its unique rural feel in favor of the creeping suburban sprawl that will, someday, presumably bring us the approved Canyon Hills and Stonefield (another 100 or so homes) projects, the spectre of a revived Canyon Crest project (yikes, 267 of 'em!) in Brea, future proposed enhancements to the lacking residential stock of the Canyon (that is, courtesy of our cities' statements of overriding consideration to bypass that pesky California Envrionmental Quality Act, not enough executive housing), the imminent glory of Circle K, and who knows how many other wonders of modern American life. 

These, indeed, are the actual Elements of the future of Carbon Canyon.

*given the fact that Phoenix, AZ is perhaps the epitome of the latest boom/bust model that has throughly decimated a grossly overbuilt and overinflated housing market (and, in this case, was truly built on sand), this word choice may not have been the best example.

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