Condo developer targets new niche in sluggish market
As it prepares the final push to sell the 28 remaining condominiums in its 245-unit Fallen Leaf project, Reno-based Pacific West Compan-ies hopes to tap a new pool of potential buyers.
The company has relied on recreational buyers, many of them from California, since the project on Mount Rose Highway just west of U.S. 395 came onto the market last November.
Its newest promotional program, however, targets first-time homebuyers looking for affordability, says Taylor Cohee, the company’s vice president of sales.
And Pacific West is targeting them the old-fashioned way it’s buying down the interest rate on buyers’ mortgages to create initial payments as low as $811 a month for the project’s largest floor plan.
Assuming continuation of current sales trends four or five units a month Pacific West would wrap up sales at Fallen Leaf by early spring.
That’s nearly 18 months longer than the company expected when it began development during a white-hot residential market, and Cohee says the mortgage buy-down is the sixth promotion Pacific West has undertaken to move condos in a slow market.
The company generated a lot of buzz both locally and in the development industry nationally with a promotion earlier this year in which the purchase price of a condo was refunded to one of 40 buyers. The winner was selected by drawing.
Pacific West estimated the cost of the promotion at $180,000 plus the price of the condo, but Cohee says it generated traffic and sales at a time when both were hard to find.
Shortly after pre-sales for Fallen Leaf began in August 2005, about 1,700 names were on an interest list. That list vaporized with the housing meltdown, and the number of cancellations by buyers means that Pacific West estimates it’s had to sell each unit three times before it gets a closed transaction.
Thus the heavy schedule of promotion, accompanied by price reductions of about 10 percent. Some units now are priced at just a hair under $300,000.
With the new mortgage buy-down program, Pacific West is putting as much distance as it can between itself and the adjustable-rate mortgages that helped fuel the subprime mortgage mess.
The underlying mortgages written by 1st National Bank of Nevada on the Fallen Leaf units are fixed-rate loans, the company says, even though the buy-down of the interest rate lowers buyers’ payments for the first two years. Those early payments are interest-only.
The company cautions buyers, however, that payments could rise sharply once the buy-down period comes to an end and they begin paying down principal in addition to interest on their loans.
Whether it’s marketing to Californians who want a condo close to the slopes of Lake Tahoe or to Reno-area renters looking to buy their first home, Pacific West continues to shift most of its marketing to the Internet and away from traditional print vehicles such as newspaper advertising, Cohee says.
Along with Fallen Leaf, Pacific West’s projects in Nevada and California include SilverCreek, a northwest Reno project in which 376 apartment units are being converted to condos.
And Cohee says the difficult sales environment in today’s market doesn’t discourage it about the future of the Reno-area condo market. Pacific West, he says, is “aggressively looking for land” in the region for its next round of developments.
Launched in 1991, Pacific West Companies has developed 9,000 single-family homes, apartment and condominiums in northern California and northern Nevada.
The new owner of The Crossing at Tahoe Valley is Second Bay Holding Tahoe, LLC, based in Redwood City, Calif. The 46,041-square-foot center was originally constructed in 1973.