No Sale: Bank Wrecks New Houses

[Liberal_in_LA]

No Sale: Bank Wrecks New Houses

By MICHAEL CORKERY

A Texas bank is about done demolishing 16 new and partially built houses acquired in Southern California through foreclosure, figuring it was better to knock them down than to try selling them in the depressed housing market.

Guaranty Bank of Austin is wrecking the structures to provide a "safe environment" for neighbors of the abandoned housing tract in Victorville, a high-desert city about 85 miles northeast of Los Angeles, a bank spokesman said.



Victorville city officials said the bank told them the cost of finishing the development would exceed what they could sell the homes for.

The bank also faced escalating city fines as vandals and squatters took over the sprawling housing project, leaving behind graffiti and drug paraphernalia, city officials said.

"It's unfortunate," said George Duran, the city's code-enforcement manager. "We would have hoped for these houses to be finished. But it's up to the owner to see what is best for them."

http://online.wsj.com/article/SB124148169574985359.html
Home prices in San Bernardino County, where Victorville is located, have fallen 60% from the housing peak in 2006, according to DataQuick, a research firm. The median new-home price in Victorville is $265,990, according to Hanley Wood Market Intelligence, a housing-research firm. Homes in the Victorville development were priced at a range of $280,00 to $350,000 in early 2008, according to Hanley Wood.

[Raine]

1. Urban sprawl

that probably should never have been and over-priced in the first place.

[notesdev]

2. Exurban sprawl, to be precise

these things are so far from urban/job centers that they can't even be called 'suburbs'. A lot of them were carved straight out of nearly worthless farmland.

The next county over from here has this problem in spades. McMansions everywhere, 2-hour commutes to city jobs, nobody is going to buy into that with real estate prices deflating fast and the possibility that gasoline might hit $4 or more again.

[ixion]

3. exactly... and add to that

the absence of well-paying jobs and there's no reason for these developments to exist.