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PG&E fear drives McMansions down
Investors, home buyers avoiding 4,336-square-foot homes
The bank is asking $285,000 for this 4,336-square-foot home with seven bedrooms and four bathrooms at 673 Vasconcellos Avenue in East Manteca.
Manteca’s ultimate McMansions – the 4,336-square-foot behemoths built by Seeno Homes just south of Joshua Cowell School – are still in a price free fall.

While other segments of the Manteca housing market appear to be starting to stabilize or at least slowing down in price drops the McMansions are still plunging down to earth and arguably beyond that.

“I never in my wildest dreams thought you’d see those homes drop below $500,000,” said Linda Aksland, a Manteca Realtor since 1981.

The homes peaked at $752,000 in early 2006.

The latest bank foreclosure offering at 673 Vasconcellos Avenue with seven bedrooms and four bathrooms plus a three-car garage is priced at $285,000 or 38 percent of the peak price. The price includes the fact there are some cabinets and appliances missing.

To put it in perspective, three years ago an 865-square-foot home on Goodale Court a block from the railroad tracks in Central Manteca on a small lot with no garage sold for $310,000.

Unlike other foreclosed homes, the McMansions get relatively few showings. The reason can be found no farther than your mail that brings you your monthly PG&E bill.

“Buyers fear the PG&E bills,” Aksland said. “Renters do too. They don’t know whether they can afford to pay them in a house that big.”

It is why investors are avoiding the homes in droves as well. Other Realtors confirm what Aksland has noted – the McMansions are extremely difficult to sell let alone rent.

Even if a buyer comes up with the $9,975 down to buy a McMansion for $285,000 with a 3.5 percent down payment on a FFA loan, there is still the issue of the $1,850 a month payment. The real deal killer, though, seems to be fear of PG&E bills. PG&E just put an 11 percent increase in place Jan. 1 following a 4.4 percent jump on Oct, 1, 2008. Additional power rate hikes are anticipated this year. The end result has been a steady drop in value.

Location, floor design and other factors also are playing against the McMansions in Heritage Ranch located in East Manteca.

Atherton Homes actually built a larger floor plan – 4,374 square feet - in the neighborhoods to the southeast of Woodward Park. In today’s markets those homes are going for at least $30,000 more – and sometimes $135,000 more - than McMansions near Cowell School. Ironically, the Atherton Homes sold new for about $20 less per square foot than the Seeno Homes.

Location plays a key role since the Atherton Homes are within walking distance of the 52-acre Woodward Park plus are close to new shopping such as The Promenade Shops at Orchard Valley.

Floor plans are a bit different as well. The Seeno Home tended to be boxier than other larger homes on the market.

A 4,374-square-foot Atherton-built home with eight bedrooms and five bathrooms at 1980 Arlington Court closed escrow for $465,000 in December. A 4,336-square-foot Seeno-built home at 568 Vasconcellos sold with seven bedrooms and four bathrooms last month for $360,000.

Under $200,000 is where the most activity is today

Aksland noted that the slow going for McMansion contrasts with the under $200,000 market.

She’s noticed in the past few months that many foreclosed homes under that mark don’t even make to the Multiple Listing Service as they have numerous offers within days of the banks assigning them to a real estate agent. The reason is simple. There are a large number of qualified buyers trying to find a home to live in along with investors who want the under $200,000 homes.

“If it’s a real deal, forget it,” Aksland said. “It’ll go pending the same day it goes on the market.”

The number of available resale homes in Manteca is down to 307 as of last week. That reflects a 3.07-month supply at today’s sales pace. Usually that would mean it’s a seller’s market but there are more foreclosures on the way plus a number of homeowners who aren’t in duress but would like to sell are holding back still waiting for the market to stabilize. A good number, though, are plunging ahead taking less than they had hoped in order to take advantage of lower prices on homes they want to buy.

The supply has dropped almost 25 percent since December when there were 376 homes available. The home buying interest has been steadily eroding the supply of homes since it peaked in September 2007 with 651 homes for sale. At the time, the sales pace was so slow that it represented a 21.7-month supply.