Sun fails to shine on developer

Sales are slow at Mosier Creek Homes

Like most developers suffering from the slowdown in the U.S. housing market, real estate veteran Peter Erickson is uncomfortable talking about the unsold units in his latest development in the Columbia River Gorge.

“It’s a sore subject,” he says.

President of Seattle-based developer The Urban Fund, Erickson says he expected buyers would pay a premium for the 34 townhomes and condos in Mosier Creek Homes, all of which were designed to achieve a Silver rating through the U.S. Green Building Council’s Leadership in Energy and Environmental Design for Homes (LEED-H) pilot program.

The 2007 median sales price in Mosier, a town of about 400 people, was $240,000, according to the Regional Multiple Listing Service. Mosier Creek Homes include 800-square-foot condos that sell for $225,000 and 1,600-square-foot townhomes that come with a $360,000 price tag. Ten of Mosier Creek’s 34 townhomes and condos have sold.

Mosier Creek Homes was completed in June 2007, just months before the sub-prime mortgage fall-out. Erickson says seven buyers—mostly second homeowners—were lined up to close on townhomes at Mosier Creek last fall, but all got cold feet and failed to close. “What started out as a homerun ended up being a two-base hit,” he says. He adds that all the buyers could have afforded the homes, but they were clearly uncomfortable with the present U.S. economy. “It was more psychological than anything,” Erickson says.

He points to a void in the appraisal industry, which does not put a fair value on energy-efficiency and onsite renewable energy systems.

“In a normal house, someone is going to pay $130 to $140 a month for utilities in a 1,600-square foot-house, where they are paying $57 a month in Mosier Creek,” he says. “That only gets better over 30 years because energy just keeps going up. There is a clear value.”

Erickson notes that each townhome includes about $30,000 worth of solar equipment, which provides about 40 percent of the townhomes’ energy needs. The homes already require about 30 percent less energy than conventionally built homes, according to Erickson. The Urban Fund investors will maintain ownership of the panels and collect federal and state tax benefits for the next five years, at which point they agreed to sell the panels to homeowners for about $6,000 – which is about a 10 percent return on their investment. With a life-expectancy of 25 years, Erickson says homeowners would see a payback in just two years.