What exactly is “Mello Roos”? How much is it in Blackstone and La Floresta in Brea?

Will Melo Roos stop you from buying?
Will Melo Roos stop you from buying?

Before we get into what Mello Roos is, let’s look at some of the amounts published by builders in Blackstone and La Floresta in Brea:

Emerald Heights by Shea Homes: $976.43 for Plan 2 & 3; $1,226.43 for Plan 4

Coral Ridge by Shea Homes: $1,226 for Plan 1 & 2; $1,412.76 for plan 3

Paseo by Standard Pacific Homes: Amount not published. The brochure states “approximately 1.13%.” I estimate the amount  to be about $728 when working backwards form the sales prices and likely will be higher or lower depending on floor plan purchased.

Ventanas by Van Daele: Approximately $800 depending on homesite

Avenida by Standard Pacific Homes: $800 per year depending on homesite

What exactly is Mello Roos?

The term itself comes from The Community Facilities Act of in 1982 authored by Senator Henry J. Mello and Assemblyman Mike Roos. The Act created “CFDs”, or Community Facilities Districts which are established by local government agencies to raise community funding.

In other words, it’s a way for a builder to finance the infrastructure needed to create a new development. This is commonly done through selling bonds. The duration of the Mello Roos depends on the life of the bond. In some areas of Placentia near Champions Sports Complex, the bonds were for 15 years.

Sample tax bill from a residence in "Stadium Lofts" in Anaheim
Sample tax bill from a residence in “Stadium Lofts” in Anaheim

From the tax bill above, you’ll see the “basic levy rate” of 1%. In California, this is the base tax rate for a property. North Orange County cities are typically about 1.03% to about $1.15% in communities that “don’t have Mello-Roos.” In Real Estate lingo,  while it’s not technically correct, having Mello Roos is any amount significantly above that range. In the bill above, you can see that CFD’s are inline with normal bonds.

However, there’s a line item only described as “other services” for an additional $2053.44! This amount is not technically “Mello Roos” per the definition above.

Confused?

That was intentional. Don’t worry — you don’t have to be an expert on Mello Roos when buying a home. (However, your Real Estate agent and CPA should know the difference.) What’s important is to know is if the total tax exceeds the normal rate in the area. Once it does, sales data shows it will affect the sales price of a home. Since it boils down to monthly payment for most buyers, the effect is similar to HOA dues.

So, next time you want to irritate your friends on the subject or Real Estate and someone asks, “How much is the Mello Roos in that community?” You should answer, “The question you should be asking is: How much are the additional bonds and assessments above the base tax rate?

Highlights of a Contingent Listing – Is it for you?

Before you put your home on the market, find out which option is best for your comfort level.
Before you put your home on the market, find out which option is best for your comfort level.

As homeowners are becoming pleased with their equity, the possibility of selling their home in order to buy often results in confusion.

How do most make the transition?

Since the buying side of your transition is obviously the tougher feat in today’s seller’s market, it usually would be best to purchase your replacement home first.

If you’re like most, this isn’t possible because the equity in your home is needed for a downpayment. For those who are worried they won’t find a home and be left scrambling after their home is sold, they often sell “contingent.”

This video shares some of the highlights of selling contingent:

For a summary on the other options, read my previous blog.

Is the Affordability Index becoming less relevant in an International Market?

Even in communities that were predominately white in North Orange County, Asian buyers have been increasing.
Even in communities that were predominately white in North Orange County, Asian buyers have been increasing.

As mentioned on several of my prior blogs, Chinese buyers for North Orange County continue to dominate new construction and the high end market.

During the boom of 2003-2006, subprime lending fueled bidding wars as home prices reached levels where it was impossible to afford a nice home on a 30 year fixed mortgage — unless you were a Doctor, Lawyer or Executive of a company.

This time around, low interest rates, former homeowners who had a foreclosure or short sale seeking to purchase, low inventory, and increasing international buyers are pushing prices upward without an end in sight.

Before subprime and International Buyers, prices had to be inline with local wages.

With International Buyers continuing to purchase, is the Affordability Index becoming less relevant?

As international buyers flood the market, do we need an international affordability index?
As international buyers flood the market, do we need an international affordability index?

Here are a few significant stats from the Bloomberg Report below:

– The amount of millionaires in China have more than DOUBLED since 2008

– 60% of Chinese with $1.6M or more in assets are in process or considering emigration with the #1 destination (40%) being the U.S.

– Reasons for emigration: Children’s Education 58%, Wealth Safety 43%, Retirement 32%

– According to the Department of Homeland Security, Chinese ranked 2nd to Mexicans for receiving legal, permanent residency.

Recently, I observed a builder’s release at Coral Ridge in Blackstone. My client and I realized that the prices had gone up almost $200,000 from the last release. Almost everyone in the room were Chinese and eyeing one lot that sold for almost $1.6M.

A crowd gathers for Shea's release for Coral Ridge.
A crowd gathers for Shea’s release for Coral Ridge.

 

Standard Pacific Homes to open “Avignon” Community in Blackstone Community of Brea

Photo from Standard Pacific's Castillian Plan 3. Builder representatives have dubbed Avignon "Castillian on steroids"
Photo from Standard Pacific’s Castillian Plan 3. Builder representatives have dubbed Avignon “Castillian on steroids”

As luxury homes in Blackstone’s Coral Ridge continues to sell like hot cakes, Standard Pacific homes is looking to offer another luxury product to fill the void left by the build out of Montserrat.

When I first received word about this community that will be North-West of the communities named above, a representative from Standard Pacific described the new development as “Castilian on Steriods.”

Avignon will feature 93 homes with floor plans from 4,570 to 5,485 square feet. Full backyards and some with canyon and city views are expected.

Expect California rooms and panoramic doors.
Expect California rooms and panoramic doors.

Just like the other luxury homes in Blackstone that were recently sold, expect outdoor living spaces optimized through “California Rooms” and Panoramic Doors. 

I’m just guessing here, but I think prices will start at $1.65M for a view home. Non-view homes likely about $1.3M.

A builder trailer and sales office may be built as soon as early April. Stay tuned.

Placing the builder’s “Priority List” in perspective

Do you have a chance of buying a new home when the list is over double digits?
Do you have a chance of buying a new home when the list is over double digits?

After meeting with an agent, comparing other available new homes, viewing the models, and getting pre-approved, you decide you want to purchase a home in a new community.

Then you discover there are 30 people on the list ahead of you.

Should you move on? Or figure it’s worth a shot?

Here are few questions to ask in order to know if you should proceed:

1. When did the list start? I just visited the sales office of Paseo at La Floresta and someone “in the know” informed me that there are over 130 people on the list. However, we both agreed that with the list over 1 year old, there are many that have either found another home to purchase or no longer interested.

2. How many are on the list? It’s tough to get a straight answer if you’re a prospective buyer. The sales reps might be trained to not disclose this information due to the risk of scaring away a buyer. On the other end of the spectrum, disclosing a low number might make a buyer suspicious of the current pricing. From my experience, the builder’s representatives are more willing to give this information to agents.

3. Are you flexible on floor plan and lot location? Many buyers forget that if you’re eyeing the corner lot with a panoramic view, it’s likely the buyers on the list will be hot after it, too.  Having flexibility will increase your chances tremendously.

4. How much have prices changed since the prior release? Now we’re entering forecast territory. If prices have risen significantly (and you still can afford it), it may eliminate some of your competition.

Even if the questions above are not looking good in your favor, you’d be surprised how many on the list are “market watchers.” In other words, they went through all the hassle of getting pre-approved only to “defer” their home choice to the next phase.

During Coral Ridge’s last phase release in Blackstone, there were over 30 people in the room and 3 homes remained unsold.

ARE YOU FLEXIBLE? During Shea's release, 2 view homes were snatched up and 3 non-view homes remained on the board.
ARE YOU FLEXIBLE? During Shea’s release, 2 view homes were snatched up and 3 non-view homes remained on the board. Homesite #36 was a corner lot with more square footage and a panoramic view.

 

Compare new homes in North Orange County side-by-side

Instead of driving around and getting confused, start with this guide FIRST!
Instead of driving around and getting confused, start with this guide FIRST!

With every visit to each builder office, you hope to collect floor plans, community information, and pricing with the hopes of staying focused. Often, you’ll arrive home confused and not knowing what just happened.

Why not start with a plan?

This guide compares square footage, schools, prices, location, HOA dues, and even addresses to the sale offices. Included in the report are the following communities:

Serrano in Blackstone

Coral Ridge in Blackstone

Emerald Heights in Blackstone

Avenida in La Floresta

Paseo in La Floresta

Ventanas in La Floresta

Compass Walk in Placentia

Summerwind in Brea

Cortile in Colony Park

Casita in Colony Park

Cortese in Amalfi Hills

Palisades in Vista Del Verde

 

Report will be emailed to you within 24 hours.

Will the “Panoramic Door” become a requirement for New Home Buyers? Can you add this feature to an existing home?

2013-03-20 12.03.22
Panoramic doors create a seamless transition between indoor and outdoor entertaining areas. Photo from Standard Pacific’s Montserrat Community.

In 2008, I was first introduced to the concept of a “disappearing wall” when viewing Toll Brothers’ “Legends” community in Yorba Linda. In their flagship model called the Ironwood, visitors entering the front door were given the ultimate first impression: an outdoor courtyard with multiple entrances to the home and a guest suite.

With many features and decor outside that were usually associated with indoor spaces, the transition between going outdoors to indoors was seamless. Upon further inspection, I realized the large openings to the courtyard were accordion-type doors that folded against the frame.

Ironwood Model in Toll Brothers' Legend community. Photo shows doors that lead into indoor spaces in closed position.
Ironwood Model in Toll Brothers’ Legend community. Photo shows doors that lead into indoor spaces in closed position.

IMG00717
When fully opened, the entire mood has a dramatic change. Photo from The Preserve by Toll Brothers.

Later designs such as the smaller homes in The Preserve and carriage-style homes in Heritage featured similar doors facing the backyard.

2013-03-20 11.56.53The effect on a room is dramatic. Although the designs of Avenida and the Preserve were around 2,400 square feet, family room spaces felt much larger due to the door’s ability to instantly make the backyard part of the room.

In the master-planned community of Blackstone, Shea’s Coral Ridge Community takes full advantage of the their views with the panoramic door feature available in their Plans 1 & 2.

2013-12-29 13.00.14
The “Western Door System” allows the sliding door to open about 70% of the opening.

Although it’s considered an option, Standard Pacific looks to be building every home in the Avenida community with this feature.

From what I’m told from multiple sources, the entire frame design is affected by this feature and must be incorporated in the construction in the very beginning. Once the frame goes up, it’s too late to add the feature.

Many existing homeowners who were interested in adding this feature quickly ended the fantasy once they heard the price tag: over $25,000 due to the structural changes needed to a home.

Shea releases Phase 13 of Coral Ridge

Shea Homes released 5 homes today to a standing room-only crowd.

I counted about 30 people in the room. Almost everyone was interested in lot 36: a premium corner/view lot with 12,491 square feet of flat space
I counted about 30 people in the room. Almost everyone was interested in lot 36: a premium corner/view lot with 12,491 square feet of flat space

It only took 2 names to be called to sell lot #36 at $1,639,900. Another view home was the next to sell at $1,564,900. 3 non-view homes remained on the board after the list was called and the buyers “deferred” to the next phase.

This has to be the biggest discrepancy I've seen with a view vs. non-view home. Almost $500k!
This has to be the biggest discrepancy I’ve seen with a view vs. non-view home. Almost $500k!

Homesite 47 is looking like quite a bargain for buyers where the view isn’t a must.

Montserrat Update: Models and “parking lot” homes were released today

As expected, all models were sold to a standing room-only crowd today at the Montserrat sales office. Cars filled the parking lot and lined the entire street.

You can still turn one of the available homes into a model!
You can still turn one of the available homes into a model!

Surprisingly, prices topped at $1.9M. That’s more than my prediction in my prior blog.

As of this morning, 3 homesites remained starting at $1,282,900. One of them is a plan 1 with a rooftop obstructed view on the first floor and full views on the 2nd floor.

After these homes sell, Montserrat will be sold out after one year of releases. Coral Ridge still has several releases in store with similar floor plans.

In a few months, Standard Pacific will open a sales office for a new community near the 57 freeway. Home designs are expected to be 4,300 to 5,100 square feet, similar to the previously built Castillian Community of Blackstone.

Call me for details.

Standard Pacific’s Montserrat Community to release highly desired models

After approximately 1 year of gradual phase releases, Standard Pacific Homes continues the builder pattern of “saving the best for last” for their “Monserrat” Community in the luxury segment of Blackstone.

Even with amateur photos like this one, it's obvious the view of these home sites change the mood of EVERY room facing south.
Even with amateur photos like this one, it’s obvious the view from these home sites change the mood of EVERY room facing south.

On February 15th, lots 6-12 will be released. All have breathtaking panoramic views to Catalina:

Lot 6 – Plan 1 (Production home) 3,484 sq ft

Lot 7 – Plan 2 (Production home) 3,641 sq ft

Lot 8 -Plan 3 MODEL 4,049 sq ft

Lot 9 – Plan 2 MODEL 3,641 sq ft

Lot 10 – Plan 1 MODEL 3,484 sq ft

Lot 11 – Plan 3 (Production home) 4,049 sq ft

Lot 12 – Plan 2 (Production home) 3,641 sq ft

Instead of decorating your next home LIKE a model, why not just buy THE model?
Instead of decorating your next home LIKE a model, why not just buy THE model?

I don’t having pricing information at this moment. I expect the non-model homes to be around $1.39M for Plan 1 to $1.45 for Plan 3. For the models, I expect Plan 1 to be around $1.59M to $1.69M for Plan 3.

Yes....patio furniture and landscaping included!
Yes….patio furniture and landscaping included!

As you expected, there will be a premium on the dreamy model homes. They have EVERYTHING upgraded from floors, paneling, ceiling fans, etc. Furniture is included. The last time I sold a model home from a different builder, the only things that weren’t included were the silk plants that were being leased.

Although I estimate about 30 buyers to be on the current priority list, it’s a toss up on how many will be present during the release specifically for the models. Since Standard Pacific is likely to add at least $200,000 to the base prices, I’d have to suspect it will eliminate a good portion of the list.

In other words, if you’re interested in pursuing a true “dream home”, I wouldn’t let the current list discourage you from trying.

What’s in store after this community is sold out?

Standard Pacific is working on another high-end community in Blackstone facing the 2011-built Castillian Community near the 57 freeway. However, don’t use this as a reason to wait. Rumor has it that the community will be much larger (5,000+ square feet) and of course — more expensive.

Want more information?