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Battered housing market leaves people downsizing their dreams

By Annie Gowen
Washington Post Staff Writer
Monday, October 11, 2010; 7:17 PM

Three years ago, a developer with grand dreams of a new neighborhood and town center leveled about 750 acres of pristine forest overlooking the Potomac River in Prince William County. Then the market tanked, and the developer of Harbor Station defaulted on a $100 million loan.

Now the land is just a gaping hole with construction debris except for one thing: a Jack Nicklaus-designed golf course hidden inside, perfectly manicured and green. Empty of players. No clubhouse. Waiting.

Rodney Cahow, 46, a communications consultant, bought his four-bedroom home in nearby Southbridge in hopes of being able to play golf in his back yard. From time to time, he rides his bike past the course and looks over the emerald expanse wistfully. It has a ghostly, unreal quality to it, like a mirage.

As the housing market struggles to recover, there are still nearly 100 canceled, stalled or foreclosed housing developments in the region, according to Hanley Wood Market Intelligence, a real estate analysis firm. In many cases, their fates remain uncertain - along with those of surrounding neighborhoods.

People who bought in these communities before the bust have been left with glossy pamphlets of unbuilt clubhouses and tennis courts and the bitter taste of what might have been. In a post-recession period full of uncertainty, one thing is clear: Expectations have been been downsized.

"All this promise, then - nothing," Cahow said.

Across the Washington area, county planners and builders say some residential projects that have been stalled for months are showing signs of life. Banks with foreclosed, half-built properties are cutting deals with new builders to swoop in to finish the work.

But many of the more opulent plans - such as a hotel near Cahow that was supposed to be built "in the great tradition of 19th-century railroad hotels, set against majestic landscapes" - will be abandoned or scaled back to fit the new reality.

Developers say it's nearly impossible to secure financing to build anything these days on the scale of pre-bust construction. The average new U.S. home is 100 square feet smaller than it was during the peak of 2007, according to the National Association of Home Builders.

"Clearly the trend is toward smaller homes," said Corey A. Stewart (R), chairman of the Prince William Board of County Supervisors. "I don't think you're going to see a return to McMansion-style developments."

This significant reshuffling is leaving some homeowners feeling as if they were victims of a bait-and-switch. Much of the angst is in communities on the western and northern fringes of the region, where the construction boom was most heated.

In LoudounCounty, for example, residents were stuck with driveways that were too short after a developer foundered, and others saw plans for a luxury clubhouse - with a swimming pool, a workout room and tennis courts - vanish.

When Colette Oliver, 59, bought a $1.2 million estate home in Aldie's Little River Farms in 2007, she and her husband were drawn by the elegant stone-and-brick facades and the roomy lots, which offered views of the misty-blue Shenandoah mountains.

The developer lost the project to foreclosure. The bank brought in a new builder who - much to the Olivers' dismay - is putting up smaller homes trimmed in vinyl siding and selling them for half the price. Meanwhile, Loudoun has snapped up two of the lots to build a fire station across the street.

"The property values have gone down on our home, and they're not going to go back up at the same ratio they would have now that our subdivision has been downscaled," Oliver said. "In this economy, I don't think anybody is planning on moving anytime soon. These were our quote dream homes unquote, our little piece of heaven. So we're kind of stuck."

Recently, Oliver's neighbor, Jonathan Redgrave, walked out to the pole in front of his home and ran up a pirate flag. Redgrave, a lawyer, sees the flag as a symbol of his unhappiness and a sign he is not going to give up without a fight. He and other neighbors are suing the county and the bank, hoping to block the fire station.

"Well, I'm very sorry, but I'm disappointed they're objecting to a firehouse in their neighborhood," said Jim Burton (I-Blue Ridge), the Loudoun supervisor from the area. He said it ought to make them feel secure instead of besieged.

In a few cases, property has changed hands with a happy outcome. In Arlington County, for example, a plan concocted during the height of the development frenzy to build luxury condominiums over a funeral home in the Virginia Square neighborhood - striking some residents as macabre - came to a halt when the builders filed for bankruptcy. Now, much to the relief of the neighborhood, there is a talk of offices and stores instead of condos.

Crumbling walls

Stewart and other Prince William officials hope a new developer will soon be found to construct Harbor Station, the nearly 2,000-acre parcel near Dumfries with the glittering golf course.

McLean developer Robert C. Kettler and partners had planned on building 4,000 houses, a town center with luxury shopping and a Virginia Railway Express station on the site. Kettler, who had invested more than $200 million in the project, lost his equity when his partner defaulted on a $100 million loan last year.

The bank maintains the golf course greens, but an imposing rock wall that was built to showcase the entrance of the development is crumbling like in a scene from "Life After People" on the History Channel.

"We are evaluating options for the entire property, including the golf course," said Elise Wilkinson, vice president for public relations for Wells Fargo, which controls it.

Kettler says he thinks the project can be built someday, but with more modest houses phased in over years.

"It can still be a modern and progressive transit-oriented development, but the price points will be considerably less," Kettler said.

The situation pains environmentalists, who had fought the project from its inception and had hoped to preserve what was then one of Northern Virginia's last privately owned waterfront forests. It is still home to abundant wildlife and a bald eagle habitat.

"The most environmentally sensitive piece of property in Prince William County has been destroyed and for what? Nothing right now," said Kim Hosen, executive director of the Prince William Conservation Alliance.

High hopes

Cahow, for his part, keeps watch, hoping building will begin anew soon.

"We're all very hopeful that maybe if the economy picks up, that it will be in the front-running to get going again," he said.

He and his 10-year-old son, Matthew, also a golfer, rode their bikes over there the other day. The maintenance guy let them past the gate. They parked their bikes and sat down next to the golf course for a little picnic, with turkey and ham sandwiches and soup out of Matthew's school thermos.

The immaculately groomed grass beckoned. But the two duffers obeyed the rules. They'd play on it someday, Cahow promised his son.

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