Luxury Home Developer Cuts Prices and Angers Residents

The Atlanta journal reports that residents are angry that a local developer has cut the price of new luxury homes in a subdivision alongside the Kennesaw Mountain National Battlefield Park.

Originally priced from the “high $500s,” prices for similar luxury homes now start from “low $300s,” which has angered earlier buyers.  As if to rub salt into the wound the developer has decided to leave the older advertising hoarding alongside the new one.

Audrey and Buddy Wagner closed on their 5 bed, 4 1/2 bath, 3 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.

“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.”

I suspect Ms. Wagner is either unfamiliar with the idea of a free market economy, or under the delusion that attorneys are somehow immune to the current financial issues facing the nation.

The situation came to a head when the original developer, Laurel River, went broke, and a less prestigious developer, Traton homes, picked up the lots at foreclosure for substantially less than the original prices, allowing them to build slightly less luxurious homes (4 bed, 2 car garage) at a considerable price difference.

As I have long suggested, realistic pricing of luxury homes is the best way to kick start the market and Traton have managed to sell 23 homes in the last ten months, which should be considered a success story rather than a failure.

Nonetheless angry residents attempted to prevent Traton from selling cheaper homes, only to discover that there was nothing in the subdivision’s covenants preventing them from doing so.

Todd Pinkley, of Traton said, “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.” A sentiment I agree with.

Ms. Wagner is not so sure. “This was not meant to be a long-term destination for us,” she said, “But if we leave, we’re going to take a big loss. What can we do? We’re stuck.” Atlanta Journal