Nearly two dozen homes empty after developer jumps ship

Sep. 2--A real estate mystery lingers in southeast Fresno: Why would a developer build two dozen houses, sell only two and then disappear?

Few cars visit this ghost tract south of Butler Avenue, known as Ashwood Park. Weeds choke many lots. The model home complex is closed. There are no real estate signs in the yards, and no phone numbers posted anywhere. Just placards in the windows that read "available."

"It's very quiet and peaceful," said Pao Ly, one of two home buyers who moved in before the developer, Lafferty Homes of San Ramon, vanished in March. He suspects the surrounding houses eventually will sell for less than the $450,000 he paid for his 2,900-square-foot home, and would like to renegotiate the deal -- if he can figure out who to call.

Even potential buyers are frustrated, Ly said. After driving by and peeking in the windows they ask him: "What happened, and how come they closed the [sales] office and why is there no contact information?"

It's unclear what happened to this neighborhood. Officials at Lafferty Homes did not respond to repeated phone calls. Nor did the developer's lender, Ohio Savings Bank. State Department of Real Estate officials don't track this sort of thing and city officials are limited in how they can respond. No public documents indicating a foreclosure have been filed.

But experts say the developer likely turned the tract over to lenders because it couldn't sell houses fast enough to cover debt payments -- much as some troubled home buyers walk away from a house they cannot afford and cannot sell.

"The odds are that there was a large loan on the land and the builder could not afford to carry the land," said Alan Nevin, economist for the California Building Industry Association.

While rare, such a step by a developer is not unheard of. And it indicates how hard-pressed some builders are in a difficult time for the real estate industry.

In a robust market, the builder likely could have sold the houses. But prices and sales have fallen, and developers are trying to sell excess lots, cutting prices, laying off workers and retreating to their home turf.

Home sales statewide are off 16.6% from a year ago, and median prices are down 5.1%. In Fresno County, prices have fallen an average of 12.5% in the past year as builders try to shed excess inventory.

Lafferty Homes may have priced the houses too high for the area, some real estate observers said. Other tracts nearby are doing better.

"The houses were too tricked out for the area," said Walter Diamond, executive vice president of the Fresno division of Beazer Homes, which has a tract in the area.

Houses at Ashwood Park started at $386,990 and went up to $475,990. Homes in competing projects were smaller and nearly $100,000 less, according to The Gregory Group of Sacramento, which tracks sales activity.

"It is not indicative of what is happening in southeast Fresno," Diamond said. "All the other builders, including us, are selling fairly well."

Lafferty Homes won approval for the 92-lot tract in 2005 and put up model homes. "They built when the market was hot. They thought they would have no trouble selling them," said Ly, the homeowner.

The homes were virtually complete, lacking only carpeting and some interior fixtures when Lafferty stopped the project last spring.

The company hinted at what might come when a representative of the company appeared before the Local Agency Formation Commission in Fresno early this summer.

Michael Smith asked the panel, which rules on land annexation requests, to postpone a decision at Dakota and Cornelia avenues, where Lafferty proposed another project.

According to minutes of the meeting, "[Smith] indicated that due to market conditions Lafferty Homes was considering terminating its development proposals."