Depressed Real Estate Market Leads to Foreclosure Sale of Building Lots And Spec House In Tolland

The court-ordered sale this Saturday of four vacant building lots and an unfinished spec house on Amanda Way shows that even Tolland, one of to live for 2011, is not immune from the nationwide real estate bust.

The foreclosure auction marks the final chapter of Zocco Builders, LLC’s effort to construct 10 new homes in Branch Brook Estates, a high-end residential development off Old Stafford Road.

“I don’t like to talk about it,” Cesare Zocco, 60, the principal member of Zocco Builders, said Tuesday of the financial predicament facing his family’s 50-year-old construction business. “I get very depressed.”

Zocco Builders, which is based in Rocky Hill, had borrowed more than $800,000 from to develop 10 lots within Branch Brook Estates, a residential development begun by local developer Richard Lee. Zocco Builders had agreed to pay Lee $1.28 million for the lots in the development and was using money from the sale of finished homes to pay back the bank. Zocco Builders could only sell five of them, however, and this didn’t bring in enough money to pay back its creditors.

"We were selling houses,” Zocco said. “Then in 2006 the whole thing crumbles.”

Caught by the virtual collapse of new home construction in Tolland, Zocco Builders was unable to attract buyers to its project. With no buyers, there was no money to make payments on the loan which Rockville Bank declined to extend, thus pushing the matter into foreclosure in Superior Court.

The total debt owed by Zocco Builders, according to court records, is $534,451 which includes $36,929 in property taxes owed to the town.

Area real estate appraiser Robert Stewart, owner of Stewart Appraisal Services who has been following the property values in Tolland and Windham counties since 1981, said home construction in Tolland is the slowest he’s seen in it in 30 years.

“New construction in Tolland has grinded to a halt,” Stewart said in an interview Wednesday.

Stewart said that town records show new home construction peeked in 1999 when permits for 148 new homes were taken out by builders. The following year, 2000, it slipped to 113 and it’s been downhill ever since. By 2008, the number was 16. In all of 2009 it was five; there were seven in 2010 and this year through the end of August it was six.

Stewart said he’s seen dips in residential housing construction in the past but “not to this extreme. … This one is going on way longer than we ever had before.”

Stewart credits the uncertainty in the economy with stalling the local housing market. Also, the state’s $2 billion deficit and the debate in Hartford over cutting expenses, i.e. jobs, versus raising taxes or some combination of both didn’t help, he said. The price of gasoline rising to $4 a gallon only added to the angst of prospective home buyers, he said.

Attorney Elizabeth C. Foran has been appointed by the court to handle the sale of the vacant lots and the spec house on another lot that Zocco Builders had mortgaged to Rockville Bank as security on the loan. Foran said the sale, which takes place at noon Saturday at the development site, has generated considerable interest as evidenced by the number of inquires she has received.

Bidders, who must register with Foran prior to the sale, are required to bring a certified bank check in the amount of $89,000, an amount equal to 10 percent of the appraised value of the property at the time the court ordered the sale. A more recent court-ordered appraisal, however, determined its current market value is $595,000, Foran said.

The $295,000 drop in value from $890,000 to $595,000 represents a loss in appraised value of roughly 33 percent.

Stewart said it is that kind of uncertainty about the true value of real estate that is keeping potential buyers on the side lines.

“So much uncertainty … that’s what limits people’s willingness to buy,” Stewart said. “Why am I buying today if this is going to be worth less in six months?”

Cesare Zocco said he was able to forestall foreclosure of the project once before in 2009 but not this time.

“Prices keep going down,” Zocco said, adding the media’s reporting about problems in the economy only helped drive them down more.

“Maybe we needed a little correction,” Zocco said, “but we didn’t need this.”