New Housing Development Demolished by Bank

I hope you're not surprised, now that the banks have received all that generous taxpayer money

I suppose if I had a choice of an empty housing development being taken over by squatters and druggies, or turning it back into a field, I'd fire up the bulldozer

The metaphor of bulldozing a brand new but empty development (The waste, the lost oppportunity, the social comment, etc) is a sad chapter in our history

 

The item mentioned they'd have had to finish them before they could sell them. I.e., throw good money after bad. Meanwhile, the houses were deteriorating and were a safety hazard.

This article is an example of making a reasonable action sound wasteful. We like to put down banks. So, here they are "demolishing perfectly good houses" when in fact they are removing unsafe structures that it makes no financial sense to complete in a market where they could not be sold.

 

Yes, I agree with the bank decision to raze the development. But it's a sad commentary of how the banks originally fueled the overbuilding, the ARM's, now it's all wasted

 

The banks were only one part of a very complex process: Newt Gingrich's bill that forbade the government from regulating what was, effectively, out-and-out gambling by financial institutions; bond rating agencies totally blowing off their job; investors demanding high returns and failing to look at fundamentals; a regulatory system that was a patchwork without coherence, and regulators failing to even do the job they were empowered to do; and greedy bankers who took advantage of all the above to push mortgages on people who had no income with which to pay off the loan.

If the government had been doing its job, none of this would have happened.

 

lot of ways to go as far as the right thing to do...

a while back a developer was faced with pretty much the same choices. had a multi-phase building project going, 3 phases in various stages of build, only one complete. it was not selling which is basically what he needed to do to finish the other two phases. he basically faced situation where he needed to look at where to cut his losses.

but instead of bulldozing the partially constructed areas, he chose to go to the local housing authority, and thru grants, refinanced low interest loans, etc. he was able to revamp the plans and put up much cheaper housing aimed at low income residents.

by doing this, he basically only lost a few million. had his original plans been successful he was set to make around 10 million. had he finished it as planned, he could have lost his entire business if the market had not turned around fast enough (it hasnt)

so, what looks like a good idea, probably is for a small group of investors only

 

At a certain point, personal responsibility has to enter into the picture. I have a career where if I fubar, I lose everything, with nobody willing to "bail" me out.

What I find disturbing is that despite all the mistakes that were made, nobody is really held accountible for the mistakes. We just start shoveling out money we don't have (Indebting future generations) to cover it up

 

What are you, some kind of a commie? This is America! We have a god-given right to be irresponsible, to screw everyone around and those not yet born, and make as much money as we possibly can!!!

 

I agree with the bulldozer over abandonment concept. Recycle the material to rehab existing structures.
I think we will see way more of this in both private and commercial real estate problem areas. The desert of the real so to say.
regards
Froley

 

Here localy we had a similar situtation. They were able to stop construction, pull up the slabs and tear down the partial structurs and get a refund for the impact fees and building permit and change the tax status back to Ag.
So if you were to get $15,000 back and a $3,000 a year tax break why would you sit on a partial home or dump $150,000 into each one only to sit on them for years?

 

We may not have discussed these specific links above, but we did have a similar discussion back in May.

Here's what I said then. I still think the same thing:

 

Probably have issues with insurance: If they let people come in and salvage material, someone would get hurt and sue them. So the insurance company would not permit it.

Of course, they could hire a properly licensed and insured salvage company.

 

we well also have something similar going on just across the main highway from us. this issue is as yet unresolved completely. this spring, 210 lots from 7 different builders and contractors were put up for bid on a foreclosure sale.

dont know the details of the sale other than two of the builders were given relief on their loan terms from the bank. and the area (i drive thru it every day as my babysitter lives in the neighborhood that lies just on the other side of this area) is coming back. houses that were just the basic frames sitting for over 14 months have now started to be completed and many are listed as already sold. not sure if they did a drastic price reduction or something to get them moving (they were about $40-75,000 over priced imm. nice houses, but most have little or no yard)