WASILLA -- Two failed real estate developments in the Matanuska-Susitna Borough go on the auction block this month, both of them unusually large victims of foreclosure.
First National Bank Alaska holds a foreclosure sale Tuesday for 62 empty half-acre lots at Gemstone Estates subdivision. The next week, 18 units at Willow Heights ranch condominiums hit the public auction block. Both sales take place in Anchorage at Nesbett State Courthouse.
Gemstone Estates occupies a large, windblown corner along Seldon Road near Teeland Middle School, a flat space broken by only a few paved roads and utility boxes.
Discovery Construction Inc. built Gemstone Estates. Owner Lee Baker did not return a call for comment. Discovery also built the four-plexes along the Parks Highway opposite Wasilla Lake.
According to First National, Discovery owes more than $2,117,000 on the Gemstone property.
Baker's ex-wife, Pat Baker, is a real estate agent. Earlier this week, Gemstone Estates was still listed for sale on Baker's Web site.
"It was supposed to be taken off," the real estate agent said Monday. "I don't really know anything about it. The builder's office just called and told us to cancel the listing."
The other project, Willow Heights, looks like a ghost town: five largely empty, gray ranch-style condo buildings aligned on a pretty bluff off a rural stretch of Fairview Loop Road. Willow Heights was built by Hummel Homes LLC.
According to First National, Hummel owes more than $1,152,000 plus interest. Hummel owners are Janice Hummel and Blaine and Myrna Brown, according to a state database.
Blaine Brown said he and his wife, a real estate agent in Anchorage, "started out with the best of intentions" to build partially assisted-living housing with no steps and floors for easy wheelchair movement.
Then came hurdle after hurdle: the Valley real estate market went flat, fuel and plywood costs skyrocketed and the state required water filtration for arsenic.
The couple, sole investors, lost a rental property to the bank, Brown said. They covered payroll out of pocket, used credit cards to cover costs, and refinanced their Anchorage home to pay bills. Brown said he's had to delay his retirement another four years.
"It was not a pleasant experience," he said. "And my wife and I were the biggest losers."
TWO OCCUPIED UNITS
Only two of 20 units at Willow Heights are not part of the foreclosure -- one the Browns own after buying out a young couple, and one owned by disabled vet Owens Wilson and his wife, Mary. Most of the units are unfinished, ranging from nearly complete to framed and insulated shells.
The Wilsons bought their unit two years ago, moving from Trapper Creek to get closer to medical care for Owens, a quadriplegic. Since then, Mary Wilson said, the couple has experienced "a lot of inherent problems" including the arsenic and a buckled bathroom floor.
But moving out is problematic because of her husband's medical condition, Wilson said. "I'm just hoping nobody turns off the lights."
Big developments like these enter foreclosure infrequently, said Cheri Gillian, vice president and corporate marketing director for First National Bank Alaska. The bank's special credits section is handling the foreclosure sales.
"The bank goes to extraordinary measures to avoid this because we take a lot of pride in matching people with loans and services that work for them," Gillian said.
"This is a last resort. Foreclosure is always a last resort."
The Mat-Su real estate market is no stranger to foreclosure.
Starting late last year, real estate agents reported a spike in the number of single-family foreclosures, due in part to the same subprime mortgage crunch hitting the Lower 48, and to cooling markets here.
But Gemstone and Willow Heights represent investments rather than a place to put the family.
Industry observers say problems with these two developments stem as much from bad business decisions as from difficult markets.
'DON'T DO STUPID THINGS'
"Clearly the market is soft; there's a lot of inventory," said Jerry Moses, associate broker with Prudential Jack White/Vista Real Estate in Wasilla. "That just means as a business person you have a sharper pencil; you don't do stupid things."
The average sales price for vacant land in Palmer dropped 42 percent this year compared to last, from about $103,000 to $60,000, according to Alaska Multiple Listing Service statistics. In Wasilla, the average price for vacant land dropped 26 percent, from about $75,000 to $55,000.
There were 188 condo units on the market this year, including 48 units behind Wasilla's Alaska Club and Discovery's Wasilla Lake project, according to Russell Joyce, president of Valley Board of Realtors.
Sixty units have sold, at an average price of $162,900, Joyce said. That's up from last year, as is the number of units listed and sold, he said.
Still, the Wasilla Lake condos sold very slowly, and Discovery ended up selling clumps of units to investors, who turned them into rentals, Joyce said.
The condo market is one that's still "needed in the Valley but is kind of isolated as to where it really works for the developer," he said. "You have to be careful."
Find Zaz Hollander online at adn.com/contact/zhollander or call 352-6711.
FOR MORE INFORMATION: Click on the "Property Sales link at
www.fnbalaska.com
