Brand new homes being bulldozed in CA

[dc dalton]

Well if you can't sell them bulldoze them (did I really just say that?)

I mean seriously, what kind of a business decision is this?

http://www.cnbc.com/id/30580830

Wouldn't it make more sense to drop the price and sell them to get SOME money out of them rather than lose everything plus the tear down costs?

Hell I would have given them $5 a piece for them

[oblivionboyj]

I think they are doing this to "protect" the investments of banks.
Think about it...
The buble burst when the inventory of homes exceded what the market could bear (at the prices they wanted for these homes).
"Homeowners" don't really own their homes in most cases. The banks do.
If the value of homes that are currently being paid for drops below an unknown threshold many of those loans will go into default. It makes no sense to continue to pay for something that is no longer worth anywhere near what you "paid" for it, if you can just walk away. Walking away from debt is easier now that it ever has been, without the stigma of being a looser for doing it.
So the banks are liquidating unselable inventory to protect the investment of loans they have that have not gone bad yet.
I have to tell you, from a business perspective I understand the logic of the banks doing this.

[GunLawyer001]

Well if you can't sell them bulldoze them (did I really just say that?)

I mean seriously, what kind of a business decision is this?

http://www.cnbc.com/id/30580830

Wouldn't it make more sense to drop the price and sell them to get SOME money out of them rather than lose everything plus the tear down costs?

Hell I would have given them $5 a piece for them

Depends on the market. Some areas have no jobs, so living there isn't viable except for retirees and Welfare recipients. If your stock of homes is greater than the number of people looking to live there, then it may pay you to destroy some of the homes and hold on to the land. Raises the price of the remaining homes, reduces annual taxes on the property. Also, I doubt they could have been sold without certificates of occupancy, which would not be issued for vandalized homes, without spending many thousands to re-install the plumbing and wiring and repair the other damage (which could easily re-occur before sale).

There's also liability for any property owner. Unoccupied homes are magnets for teens looking for places to do stupid things, and for vagrants and illegal aliens. One of them gets drunk and falls down a vandalized stairwell, guess who gets sued?

[tlgpa]

It does sound odd. But according to the video, 5 were finished models, and 12 were unfinished. The bank was being fined daily for the unfinished homes. Fines, tacked onto the loss from the bankrupt builder, it was probably cheaper to demolish them.

You'd think they could've just auctioned them off for anything (even $5). But I'd imagine the buyer would have to assume the daily fines as well.

[BSH]

I'll bet those are included in some of those "toxic assets" you are paying for through TARP. So, you already DID pay $5 for them! You just don't get the deed. LOL!

[Siobhra]

They were not "Just bulldozed". They were striped, then bulldozed. The Windows and doorways were pulled and saved, the pipes were pulled, the sinks and cabinets were all saved. All that could be stripped off was stripped off and sold to a salvage yard.

Just like auto salvage yards they have them for building parts.

[camper]

It's supply and demand: Destroy some of the supply to increase more demand.

But I agree, its pretty rediculous. I'm not a fan of a welfare state, but I admit that part of me just shakes my head when I think of the people living out of their cars and on the streets because they have nowhere to live, and brand new homes get crushed.

camper

[Dredly]

makes sense to me, CA is in a world of hurt and there is no chance of improvement in the future. The longer a house stands the more chance of it going to squatters and the bank keeps getting charged for it... just trash it and sit on the land or sell the land off.

what is a shame is the amount of building materials being lost. I'd rather see the houses donated to Habitat for Humanity or some other program, the base structure is already there, let them finish it and do their little dance and at least let people live in the them.

[ReconLdr]

I have a hard time understanding this. They forclosed on the homes because someone couldn't pay... so to protect their investment they destroy it? Doesn't make sense to me.

[Dredly]

I have a hard time understanding this. They forclosed on the homes because someone couldn't pay... so to protect their investment they destroy it? Doesn't make sense to me.

In many cases the homes were never lived in or if they were they have been so destroyed that still owning them is a liability.

Keep in mind that the bank is the owner and the owner is responsible for the house and its upkeep and safety. if there is a broken stair and a door to door salesman falls on it they will have a huge lawsuit against the bank. In many cases these homes aren't worth the material used to make them BEFORE someone goes in, steals everything, kicks down walls, breaks the drywall, destroys counter tops... etc. They are worth more as scrap and to resell the land then to let them stand and and take the risk.

In many cases these foreclosed homes are either being squatted in (without running water, electricity... etc) or are being used as hangouts for local kids... all of which exposes the owner to massive liability.