New Construction Baffles Underwater Homeowners

[Liberal_in_LA]

New Construction Baffles Underwater Homeowners
Despite Housing Crisis, New Building Continues

November 11, 2010


LAS VEGAS -- Even though so many homeowners in the Las Vegas valley are underwater on their mortgages, builders are once again putting up new houses.

Las Vegas home builder Richard Plaster said that only two units in the eight-unit condominium project he's developing near 215 and Stephanie Street have sold.

And with 12,400 foreclosures, short sales and traditional homes on the market -- not to mention the 15 percent jobless rate -- why build?

"It's a legitimate concern, but what we're doing is building for the market that specifically wants a new house," Plaster said. "The curse is: You are what you are. You do what you do. So, I'm a builder and I build."

But a modern-day ghost town begs to differ.

In one Las Vegas neighborhood, house after house bears a scarlet letter on its front door -- the notice of default. Appliances and light fixtures have been stripped from the homes, the walls adorned with graffiti, the development padlocked. It's likely residents the urban wildlife ubiquitous to Las Vegas: feral cats, pigeons and grackles, the odd scorpion or two.

http://www.fox5vegas.com/news/25767726/detail.html

[Crazy Dave]

1. I'm surprised he has investors or can finance them

Unless it's all out of his own pocket.

[truedelphi]

4. Maybe he is backed by one of the Biggest Players on Wall Street.

Someone on Wall Street has to be lending money to someone.

Plus there is a lot of laundering of drug money (And other money) that goes on.

Plus tax losses make it possible for some people to attempt anything, as in the end they don't lose that much.

[Gidney N Cloyd]

2. I wonder why the city would approve this? Big bidness is lost on me, I'm afraid.

[Blue_Tires]

11. because if Vegas is anything like other cities I've lived in then

The mayor's office and city council are full of bankers and developers (or are at least being bankrolled by them)

[marmar]

3. Stupid is as stupid does.....yet again.

nt

[TwilightGardener]

5. There are people who already own lots, and thus would rather build

on their lot rather than keep paying property taxes on it to stay vacant while buying another house--that doesn't make much sense. Also, not that easy a process to buy a foreclosure or short sale--I considered buying one, but was explained to me that I could be waiting many months for the bank to accept or reject my offer. One last thing--foreclosures often come with damage, seen and unseen, and also this limits the kind of financing you can use. Edit to add: I'm speaking in general, not necessarily about Las Vegas.

[Liberal_in_LA]

6. easy to buy foreclosure, hard to buy short sale

[TwilightGardener]

7. I've heard that buying a foreclosure could involve competing with

cash bidders at an auction-type or courthouse-steps environment (basically companies that have the cash to buy foreclosures and rehab and flip as soon as possible). I looked into a short sale, but I needed somewhere to live within a certain time frame more than I wanted to wait for that house to go through its "process".

[SoCalDem]

12. Yep..foreclosures are often advertised at ridiculously low prices

so that a LOT of people look at them. hoping for a bargain, and once a bidding war starts, the house ends up selling for "normal" price....and people with cash often deal with the ones doing the foreclosing, and the houses are swooped on before anyone really even gets to look at them..

My friend's neighbor;s house went for $68K, and the people renting it from the guy who bought it, said it was one of FIVE houses he bought on ONE day...That house sold for $300K a few years ago...

Lots of people have cash & cash talks.

[JustAnotherGen]

14. Yep

Looking at the same thing. And - well - I'm concerned that I'd be purchasing a home that has been foreclosed on - but the bank has no proof that they owned the loan.


Still not looking at new homes - I want something 18th century or 19th century - but two I've looked at thus far? Foreclosed.

Me no trust Chase Manhattan that they really DO own the 'old mortgage' and the old homeowners can't come back in when they get some justice.

[Crazy Dave]

16. I bought a home 50 years old

I needed a home, it was empty, at a great price and on a nice lot.

And of course I bought it to actually live in. Not as a status symbol, to "flip" or to use as an investment.

[Xithras]

8. There are also a lot of people who simply want a "new" house.

One of my wifes friends was complaining about this recently. She and her husband wanted to buy a house, but they only wanted a NEW house that nobody had lived in. There's only one active development in our area, and she didn't like the floorplans.

I tried to talk some sense into her, but some people just have this mindset that "new" is better.

[Duer 157099]

9. It's because we live in the age of "disposable" everything

Old house needs fixin'? No problem! Throw it away and buy a NEW one!

Course this only applies to the folks who have the money to do so, but they still exist apparently.

[Greyhound]

10. It's not about houses, it's about banks playing their game.

They've managed to completely disconnect currency from value, so now the only motivation is to increase the amount of currency in the financial system regardless of what it represents.

[rug]

13. That's understandable unless you have gills.

[hugo_from_TN]

15. Not really suprising

If the new homes are priced competitive with the homes being sold that are underwater, they will have an advantage. Building materials and labor are cheaper now due to lower demand, and a lot of homeowners underwater are unwilling to lower the price they are asking to the level they need.

From the article:
"For Gianna Kraft, five new developments -- and the abandoned one a few blocks away -- cropping up near the home she is trying to sell isn't helping.
She and her husband bought their home two years ago and are $60,000 underwater, she said.
"This is going to be my competition and it worries me," Kraft said. "I don't think I can compete with this, and I don't understand why they're building. There are so many foreclosures in the Las Vegas valley that are not occupied, not sold.""

Note that she can't compete with the new homes - she's not willing to lower the price to below the new home price.