EXHIBIT 5.1


                                  June 20, 1997



Monterey Homes Corporation
6613 North Scottsdale Road
Suite 200
Scottsdale, Arizona 85250

                  Re:    Registration Statement on Form S-1

Ladies and Gentlemen:

                  We have acted as  counsel to  Monterey  Homes  Corporation,  a
Maryland  corporation  (the  "Company"),  in connection with its proposed public
offering of 212,398  Warrants to purchase  256,345  shares of Common  Stock (the
"Warrant  Shares"),  $0.01 par value  ("Warrants")  pursuant  to a  Registration
Statement filed on Form S-1 on the date hereof ("Registration Statement").

                  In that  connection,  we have examined  originals or copies of
such  documents,  corporate  records  and other  instruments  as we have  deemed
necessary or appropriate for purposes of this opinion including the Charter, and
By-laws of the Company.  We have assumed without  independent  verification  the
genuineness of signatures,  the  authenticity  of documents,  and the conformity
with originals of copies.

                  Based  on  the  foregoing,  we are of  the  opinion  that  the
Warrants have been validly issued and that the Warrant  Shares,  when issued and
paid for in accordance with the terms of the Warrant  Agreement filed as Exhibit
4.2 to the  Registration  Statement  and of the  Assumption  Agreement  filed as
Exhibit 4.3 to the Registration  Statement,  will be validly issued,  fully paid
and non-assessable.

                  We hereby  consent to the use of this opinion as an exhibit to
the Registration  Statement and incorporation by reference into the Registration
Statement  and to the  reference  to  our  firm  under  "Legal  Matters"  in the
Prospectus included in the Registration Statement.

                  By giving the foregoing consent,  we do not admit that we come
within the category of persons whose consent is required  under Section 7 of the
Securities Act of 1933.

                                        Very truly yours,


                                        Venable, Baetjer & Howard