Do you know what a "Poly Farm" ofr "PVC Farm" is? You better learn quick! "Poly Farms" refers to the unfinished subdivision lots where green PVC sewer pipes sticking up out of the ground in unfinished subdivisions and abandoned developments. They are called "farms" because they appear to be growing out of the ground. The only other growths are the weeds that are growing up along side of them. We certainly are not speaking of construction growth. These unfinished subdivisions developments with green pipes sticking up from the ground are a visible eyesore all across the Atlanta landscape. For those that understand Atlanta real estate they send a warning, that purchasing a home in some of these subdivisions may not be a smart idea. What at first sounds like a great deal, may be your financial Waterloo.
Suppose you purchased a home when the subdivision was just starting at $400K hoping to sell when the subdivision starts to mature by undercutting the builders new pricing, and selling a loaded home well beneath the new construction phase, and still making a great profit. Today the risk is that if you purchase a home even at a discounted price, the builder may not be able to finish the subdivision, or he may under cut your 400K purchase by introducing a new product, perhaps a ranch home that is priced substantially below your acquisition cost. Suppose the builder undercuts your 400K and introduces a 275K home? That is a major hit to your equity, and salability. If the development you purchased in goes bankrupt there are other issues, what about the amenities? What about vandalism and crime? What about the builder warranties? What about if the bank sells off the remainder of the subdivision to another builder that decides to build homes less than half you price? In simpler terms, your screwed! You may have purchased a home that you cannot sell until the market comes back. In the late 1980's the real estate market in Atlanta collapsed, and the town was loaded with unfinished homes. In the 1990's it took almost 1 full decade for homes in many of these types of neighborhoods to regain their equity. Most new agents do not understand the risk, and cannot advise you correctly. The Atlanta market had several collapses one in the 1970's, and another in the late 1980's. The scope of this correction is much worse than either of those 2 corrections.
An experienced agent that is working with a buyer will educate their clients that not every deal in real estate is a bargain. If it sounds too good to be true, it probably is a loser. Foolish buyers may be left with a subdivision with uncompleted amenities, and have to maintain a disproportionate share of maintenance to keep the neighborhood from looking like a vandalized foreclosureville. The time to ask for advice is before you buy a home, not after. If you look around there are other warning signs all over the place. It is smart to pay attention to the signs, if you don't...it will cost you!
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This just happened in one of our subdivisions. The second phase houses are all much smaller because the market changed! Talk about some angry homeowners!
Dumb question, I know, but what are the green pipes? We definitely have some subdivisions to be leary of here in the Indianapolis area too, but I can't say as I have noticed 'green pipes'.
Ron Moore The Home Team Pros (RE/MAX Professionals) In the last down turn many homeowners lost major equity because they purchased and never anticipated the obvious. I showed one home owner, that the S/D with the 4500 square foot homes was in trouble in the Alpharetta area. I had the developer take out the Master deed, and the minimum square footage recorded was 1500 square foot. My buyer thanked me, and he purchased another home. The subdivision later brought in a tract builder that built homes at half the size, and the equity on the upper end was destroyed for over a decade! I refer to these as 2 tier subdivisions that sell different priced products.
Pat Haddad, ABR, CRS, e-PRO, GRI (The Haddad Team, Keller Williams Realty) Sewer hookups.
I too am a long standing Realtor and have never heard the term "green pipes" I would appreciate some clarification. Otherwise your post is GREAT, very informative.
Okay, cancel my order for the second home I'd planned in Atlanta. Things sound bad. Hope they don't spread to Columbus where my daughter lives.
Christopher Bonta,Realtor/ Integrity and Honesty (The Masiello Group) It is the 6" sewer pipe that sticks out of the ground for each lot.
Barbara S. Duncan ABR, CRS, GRI, e-PRO Searcy AR (RE/MAX Advantage) Construction has stopped on most sites, and one of our biggest builders closed its doors last week.
Jim not only in Atlanta. We have streets that leed to nothing.
Jim: which builder is it that closed its doors? A local or national builder? You are helping my daughter in the purchase of her first home and I can tell you this all very scary to me as a mother...glad you are there.
John Walters (Specialized Real Estate) I was out previewing today, and was shocked at what I was seeing. Construction for the most part has stopped, and weeds are taking over!
Thats as new phrase for my lexicon... fortunately we don't have many of those in the close-in DC Metro area.
Diana Corcoran - Rhinebeck Real Estate (Paul Hallenbeck Real Estate) The builder in the news these days are Robert Harris Homes. On the news this evening they mention most buyers will lose deposits.
Fran E Orr (Coldwell Banker Residential Brokerage) It is a suburban thing for a new homes subdivision.
Jim...
I have never heard that expression but I have seen way too many of them in the area. Those pipes are sticking up everywhere!
In these situations experience is so critical. If you have not lived through a few different markets you will not know how to advise your clients.
Good post Jim. Sounds like our market. Please post this to the mortgage fraud group. We've talked about these new home issues before. The builders are caught in a no-win situation in addition to the buyers. 90% of our sales are REO properties with months more to come. We went thru a similar cycle from 1991-1996 when our cities (Murrieta & Temecula) were 1/5 today's size. You're gonna pay for the experience one way or another so you may as well hire an experienced agent rather than buy yourself an experience.
Jim, I'd never heard of a poly farm before, but now I know. Something new learned today. Thanks. Also, ... "If it sounds too good to be true" .... was one of my Dad's favorite expressions.
Bob Cumiskey, US Army Retired, Your Sun City Center, Florida ~ Realtor (A 1 Connection Realty, Inc.) I've posted a picture for all to see why this term is used. Buyer beware!
Richard Weisser, Associate Broker, E-Pro ERA United Realty, Auctioneer, CE Author (Coweta Fayette Real Estate, Inc. ERA United Realty) They are all over Atlanta...
Randy L. Prothero - Hawaii REALTOR® (Century 21 Liberty Homes) We must be able to responsibly advise our clients.
Gene Wunderlich - Selling Southwest California Homes / Temecula & Murrieta (Coldwell Banker Residential Brokerage) So many persons believe there is no skill needed to buy a home, brother are they dead wrong.
We don't have much of that around here in the close-in DC area, but I wouldn't touch a home in one of those for anything. Jim, you bring up a good point about the time someone might have to hold a home within a poly farm just to break even.
AJ & Jodee Heidmann (Coldwell Banker Residential Brokerage) There was one subdivision in the Roswell area that sat for over 10 years with only 1 home sold. There were many others over the years where the builder / developer went bankrupt and the swimming pool and amenities went unfinished. THE HOA had many unsuccessful lawsuits, and the homeowners had to bear the brunt of the expenses for over 4 years. It is difficult to pay for a swimming pool when there isn't one. These are real life scenarios that I write about, and I am writing from experience.
I was going to buy in one of those farms back in 1986 but it scared me. Today it is a thriving subdivision.
Denise Allen Realtor@ Chesapeake (GSH Real Estate) Right now thre are a lot of them! I get a lot of inquiries from developers that cannot give them away right now. At some point these will be great opportunities!
I'm not seeing any new subdivisions going in here. Once all the new construction recycles, we might have a chance to start developing again.
Kay Van Kampen, Broker, Springfield Missouri Real Estate (RE/MAX Solutions) Afew new ones are still coming up uout of the ground here. I am at a loss since there are no contracts written! Beyond scary here!