Cheaper homes in subdivision anger residents

The for-sale signs at the entrance to Hays Farm offer the first clues that not all went as planned at the subdivision alongside Kennesaw Mountain National Battlefield Park.

The older, more weathered sign reads, “new homes … high $500s.”

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BOB ANDRES / bandres@ajc.com

Some Hays Farm subdivision residents are angry because lots in the foreground of this picture are selling for much less than the luxury initially built in the development.

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BOB ANDRES / bandres@ajc.com

Sign for the Hays Farm subdivision advertise two different house price points.

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The newer, shinier sign reads, “distinctive homes … from the low $300s.”

Two price ranges. Two sets of home buyers.

And one big headache for original homeowners who paid more for their homes only to see the newer, cheaper homes lower their property values. Many of these owners can’t refinance because their homes are worth less than their mortgages. And they can forget trying to sell them — they’d lose tens of thousands of dollars on homes now assessed at much lower values.

Homeowners point many fingers: at a bankrupt builder; a financially challenged developer; skittish bankers; an over-built, over-priced West Cobb housing market; and a lousy economy that’s ravaging the real-estate industry.

The Hays Farm saga, a rarity in Metro Atlanta, mimics two-tiered subdivision troubles more common in the over-heated housing markets of California, Nevada and Florida.

It’s common in a recession for foreclosed homes in a community to lower everybody’s property values. And new subdivisions typically advertise homes — before they’re marketed — at varying price levels. But tax and building officials in Cobb, Gwinnett and Fulton counties didn’t know of other subdivisions with such widespread, after-the-fact pricing disparities, and dissension, as Hays Farm.

Audrey and Buddy Wagner closed on their five bedroom, four-and-a-half bath, three-car garage home off Dallas Highway in mid-2007. All was bliss until new homes sprouted nearby at more than $200,000 less than their $545,000 purchase price.

“We said, ‘Oh no, there goes our home value,’” Audrey Wagner said. “We are attorneys, neurosurgeons, CPAs and business professionals and we’ve worked hard to get to live in homes like this. And to have that diminished by $300,000 homes is frustrating.”

The Hays family owned the 59-acre tract for generations, holding out against Cobb’s westward sprawl until 2004 when Weaver & Woodbery bought the property. The developer put in roads and sewer, carved out 75 ½-acre lots and sold about a dozen parcels each to builders Monte Hewitt Homes and Laurel River Properties.

Hewitt offered 4,300-square foot homes where “luxury is the trademark.” A swimming pool, cabana and lighted tennis courts further enticed homeowners.

“I predict buyers will fall in love with the homes and the community,” Hewitt said in 2006.

The Wagners and neighbor Bridget Davis did. At first.

“I love the area and the houses are very well-built,” said Davis who moved into her $668,000, five-bedroom home in July 2006. “At the time it seemed like a great price for what we were getting.”

Soon, though, the housing market began to wane. Laurel River went bankrupt. Their unsold properties were taken over by the bank. Without any high-end buyers, Weaver & Woodbery dropped lot prices substantially, guaranteeing cheaper houses could be built alongside more expensive ones.

Traton Homes, a lower-priced builder, picked up many of the foreclosed lots. Traton’s construction costs averaged $248,262 for its first-phase homes, according to Cobb County building permit fees. Monte Hewitt’s costs averaged $308,710.

Traton has sold 23 homes since April 2008 with prices ranging from $326,900 to $420,400. Traton met with original homeowners last year after complaints reached the builder, county officials and others that the cheaper homes were lowering property values.

“We expected them to tell us they’d be building in the $500,000 price range,” said Davis, whose home on Meadow Path Drive sits across from a Traton home. “When they said they were building in the low 300s, we were absolutely furious.”

Original homeowners had little recourse. Nothing in the subdivision’s covenants restricted a builder from putting up cheaper homes. The Davises and the Wagners say that the recession, with its impact on credit and housing, is largely responsible for Hays Farms’ troubles. But they hold Traton “accountable” for selling cheaper homes. And they wonder why Weaver & Woodbery couldn’t sit on the lots until the economy turned and like-priced homes would again gain favor.

“We are subject to market forces and price fluctuations and the willingness of purchasers to pay our asking price just like any other business,” said the developer’s Todd Prinkey. “We ultimately feel it’s in the best interest of the subdivision to have an active community filled with occupied homes of varying price levels versus a subdivision with a limited number of homes and dozens of empty lots.”

Wagner and Davis resignedly agree. They’ve even dropped their animus toward newcomers who got great deals on less luxurious, yet well-appointed homes with two-car garages and floor plans beginning at 3,000 square feet.

Hard feelings, though, linger. Neither the Wagners nor the Davises — whose homes are now appraised at roughly $100,000 more than what they could sell them for — can reasonably re-finance their homes. And they’d take a financial bath if they tried to sell.

“This was not meant to be a long-term destination for us,” said Audrey Wagner, a marketing executive for a Fortune 500 company. “But if we leave, we’re going to take a big loss. What can we do? We’re stuck.”

COMPARISONS OF HAYS FARM HOMES

Original homes built by Monte Hewitt and Laurel River:

Price: the $600,000s

Size: up to 4,300 square feet

Bedrooms: 5

Some features: 3-car garages, oak-paneled living room, 12-foot ceilings, mud room, butler pantry, custom kitchen cabinets, wood deck, patio, outdoor fireplace and kitchen.

Newer homes built by Traton:

Price: from the low $300,000s

Size: up to 4,000 square feet

Bedrooms: 4-6

Some features: 2-car garages, granite countertops, maple cabinets, hardwood kitchen floors, 10-foot ceilings, finished bonus or media room.