JTS... to leave Castle Oaks

Here's an interesting little tidbit from the last few weeks that has seemingly not made it into any press yet. It appears that JTS Communities, Inc., the housing developer behind the current Castle Oaks development in Ione, is in the process of selling all of its Castle Oaks development to an investor. Assets would include the lots, unsold homes, and information center on the corner of Fairway and Castle Oaks drive.

As of now, JTS is aggressively marketing the remaining finished homes with a "Foreclosure Pricing" campaign and has also place the model home for sale.

The last estimate by the sales staff of JTS was a lot inventory of at least 10 years, up from an original estimate of 5-7 years back in 2005. Obviously the housing slowdown has severely impacted the amount of homes sold and thus the timeline of lot consumption, estimated to be 700+ lots.

It is not known if the sale of assets would include Amador County land outside of Castle Oaks that is part of the JTS land portfolio.

This is not the first time a developer for Castle Oaks has left the development. JTS is the second developer after the original developer filed for bankruptcy after building 215 single-family homes. The original 1989 development agreement called for 670 single-family and 360 multi-family homes.

Viability of Jackson Hills Development

This entry regarding Jackson Hills Golf Community will not discuss the environmental and economic impact to the city of Jackson or Amador County. The entry is also not to skewer the developement company behind the Jackson Hills project, New Faze Development. In fact, from what I have read, I'm rather in favor of the infill projects New Faze has taken on in the past.

Rather, let's focus on whether it makes economic sense to put in another golf course community in Amador County. As a golf course destination, the county already has Mace Meadows and Castle Oaks. Within a 30 minute drive are a plethora of other golf courses in Sacramento. There were rumors, at one point, that Jackson Rancheria was looking into building a golf course on their property, but that talk seems to have diminished. If a deep pocketed tribal casino in the county does not go forward with a golf course because the numbers don't make sense, why should another course be built.


Next, let's look at housing market. For all intensive purposes, the housing bubble has popped. I don't need to go into the figures that have been put out by all the other blogs. If you need some numbers, please click on the recommended blog links and go from there. Home sales have slowed to almost a screeching halt, mortgage lending standards are beginning to tighten, and Amador County is not immune to any of these factors, just about 6 months lagging.

So do we have a crystal ball for how home sales may fare for Jackson Hills? Possibly. What about Castle Oaks in Ione? Castle Oaks is also a golf course community in Amador County. The lots currently in development are through JTS Communities. Since sales began in late 2005 for their mid-range Premiere and high-end Masters Series homes, their sales numbers are as follows:

• Premier Series - Phase 1 - 81 lots / 26 sales / 3 spec homes = 32% sold in 16 months
• Masters Series - Phase 1 - 59 lots / 17 sales / 5 spec homes = 28.8% sold in 16 months

In fact, JTS has begun construction on 7 additional spec homes on the Masters lots. Perhaps one of the ways JTS has protected itself from the housing collapse has been its "built to order" methodology. They don't build unless a buyer places a deposit on a lot, which makes me wonder why they are putting up 7 Masters spec homes. It's clear from the numbers above that Castle Oaks isn't the booming success JTS has grown used to from their flipper friendly developments in Lincoln, West Sacramento, and Rancho Cordova.

I wonder if New Faze will go about planning the Jackson Hills development as most home builders do. That is, phases are planned and built out with the expectation of buyers. With the current housing market condition, and no signs of improvement in the near future, New Faze could be sitting on quite a bit of standing home inventory.

Not only does the Jackson Hills development have to compete with the on-going 7-10 year Castle Oaks development, there are also plans for a 1,334 home Gold Rush and a 588 home Wicklow Way project in Amador County.

New Faze should realize that the housing bubble has burst. They should also look at the difficulty JTS has had in Castle Oaks as a barometer for additional golf course communities in Amador County.