Bank Demolishes Empty New Homes In Calif.
For months, economists and analysts have been half-joking that the nation's millions of newish, unsold, empty homes should be bulldozed to spur a recovery in the housing market.
Now, it's actually happening, the Wall Street Journal reports.
A Texas bank is tearing down 16 new and partially built homes built in Southern California's San Bernadino County that have sat empty and become havens for squatters and drug dealers.
San Bernadino County, along with parts of Arizona and southern Nevada, was among the most overbuilt regions of the country during the housing bubble. Builders put up new houses on spec assuming they'd be sold quickly and housing prices would continue to rise.
But now, the nation has a 10.7 month inventory, or supply, of unsold new homes, the Commerce Department reported last week.
Until or unless that inventory disappears, or falls to a manageable amount -- think of it like a $10,000 balance on your credit card -- there can be no real housing recovery because no new houses will be built, which crimps the construction industry and so on.
The bank doing the wrecking is Guaranty Bank of Austin, which holds a number of foreclosed and empty properties.
The bank can't sell the houses as they are and the cost of finishing the entire development would be more than what the bank could eventually sell them for, Guaranty told the government of Victorville, Calif., the city where the homes sit. Victorville is northeast of Los Angeles.
Home prices in San Bernadino County have dropped 60 percent since 2006, the Journal reports.
Some of the houses have been stripped of their appliances, the demolition crew said, adding that some of the lumber would be ground up into mulch and the rest would be sent to Mexico for construction there.
Don't be surprised to see this scene repeated elsewhere around the country as banks seek to reduce housing inventory.
May 5, 2009; 2:42 PM ET
Categories: The Ticker | Tags: housing bubble, housing crisis
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