Housing troubles slip into gated communities

Past economic downturns haven’t always reached into the upper income levels, she said. But the banking debacle, coupled with massive investment losses and job cuts at all levels, have changed the game for many.

On Clipstone Court, for instance, a cul-de-sac in Country Club of the South, one home has been sold twice in less than a year. In 2008, the 4,400 square foot, 6-bedroom home sold for $502,000. Eleven months later, the same home sold for $545,000. But just across the street, a similar 3,600-square-foot, 6-bedroom home was recently listed for $459,000. Its sale price remains to be seen.

Foreclosures are difficult to track by neighborhood, as is determining those homes that were once owned but are now being rented. But while evidence of the trend is largely anecdotal, people familiar with these communities see the distress.

“I’ve got clients who are 120 days away from just walking away,” said Russ Robinson, a Re/max Greater Atlanta agent who represents buyers and sellers in luxury communities, including Country Club of the South. “They are so upside down on their investment because of the economy, they’re considering just walking away. And that is unheard of in many of these neighborhoods.”

There are approximately 70 homes for sale in Country Club of the South, ranging in price from $400,000 to $5.6 million, according to the First Multiple Listing Service. Since 2007, there have been 102 sales but just 14 thus far in 2010, ranging from $352,000 to $3.6 million.

There are also approximately 70 homes for sale at the Sugarloaf Country Club with list prices between $515,000 and $6.7 million, according to FMLS. In the past 36 months, there have been 214 sales, 53 coming this year, with sale prices from $461,000 to $3 million.

Often the newer the community, the more distressed the property owner. Homes in older established communities, such as Country Club of the South, have more equity and a track record of resales, said D. Scott Murphy, chief executive at the Atlanta-based appraisal shop of DS Murphy & Associates.

“Another big part of it is these [newer] neighborhoods that haven’t had time to mature and are all new construction," Murphy said. "There are a lot of builder-generated sales and that’s not a true arm’s length sale. The builder just needs to dump it and get out of there and a homeowner wouldn’t do that.”

Nor has the country club set been immune to mortgage malfeasance.

“The [mortgage] fraud problem is what was responsible for many of the pricing spikes high-end gated communities saw,” Gebhardt said.

Deceitful buyers would purchase a property at one sale price, Gebhardt said, but falsify papers to show a much higher price. The buyers pocketed the difference from the inflated loan, sometimes six- or seven-figures, and then allowed the home to go into foreclosure.

That scheme left Country Club of the South and other communities like St. Marlo and Sugarloaf with severely inflated sale prices and a growing number of empty homes. And that was well before the economy went south, she said.

While Country Club of the South was able to recover fairly quickly, St. Marlo County Club and Sugarloaf, both located in Duluth, are still suffering effects from the mortgage fallout, Gebhardt said.

Murphy said since the downturn, the Manor Golf and Country Club in Alpharetta has been one of the hardest hit neighborhoods because the community didn’t have a chance to get established “before the music stopped in 2007.”

“It is still showing declining values of about 2 percent a month and has a two-year supply of homes,” Murphy said.

A year ago Laurel Springs in Suwanee had nearly a two-year supply of homes, but now has just over six months, he said.

Sugarloaf has hardly had it easy over the past 18 to 24 months, the appraiser said. There was a period where Sugarloaf was one of the area's fastest declining neighborhoods. At one point, the 1,300-home subdivision had more than six years-worth of inventory available. But now values are “near level to slightly declining and inventory has dropped to one and a half years,” he said.

Inventory is decreasing in some gated communities, because prices have dropped low enough that homes are becoming affordable for more buyers. These neighborhoods are also coping with a new phenomenon: the renter.

“When the owner can’t sell or can’t afford to sell below a certain price, they are quickly turning to renting these days,” Robinson said. “Many homes over $2 million can be rented for $3,000 to $4,000 a month and that is staggering.”

Michele Collins, a real estate agent with Harry Norman, has written more rental contracts in Sugarloaf this year than ever.

“I’ve already done five or six myself and we’re not done with the year yet,” she said. “But you have to understand, homes in communities like this were never rented. These were heavily owner-occupied and corporately-owned homes.”

R.O. and Dorothy Powell, avid golfers who recently moved to the Atlanta area from Florida, are part of the growing rental trend. The Powells and their two sons are essentially test-driving the Sugarloaf experience, renting a home while looking for one to buy in the same neighborhood.

“I am surprised and pleased we were able to find a rental home here in the same community where we want to live,” said R.O. Powell.

Powell said renting in the neighborhood where they want to live has lessened the urgency to find a home to buy. He also says dropping prices in the neighborhood allow the family the opportunity to buy a larger home larger than in a normal housing market.

“I think we still would have been here in the community,” he said. “But we might be looking for a smaller home.”

Most real estate experts say this is a good time for people who are looking to buy a home, especially if they want to trade up to a home behind a gate.

“The window of opportunity is open,” Gebhardt said. “For first-time buyers, move-up buyers or anybody. I mean, if somebody wants to buy a house in general, the whole country is on sale.”