After considering the price tag for completing construction on a halted housing tract they foreclosed on in Victorville, CA., a Texas-based bank decided razing the whole project would cost less in the end. So the 16 homes (with models finished, others merely framed) were brought down and what could be salvaged was sold for scrap. The developer of the housing project visualized a selling price of more than $300,000 at the start of construction. But when reality set in during construction, a price of half that number would be more on par. Presently, more than 9,300 homes under construction have been halted in nearly 250 residential housing projects throughout California on indefinite hiatus. De-construction may be the next big business opportunity?

ft take: We do not need more houses added to the already-overwhelming existing and incoming inventory, and the out-of-state bank was able to figure that out. Their first investment in construction loans was a mistake in the classic fundamentals of price, timing and location – 2007 bubble pricing in an area remote from the recession proof centers of population density. Now that would-be flippers of boom-time speculation have been driven out of the market and the California Department of Employment Development reports a decline of over 600,000 paying jobs during the past twelve months, fewer Californians remain to buy any homes, much less new homes (unless California’s subsidy of builders with the tax credit only for buyers of their homes, artificially – and for the worst of reasons – redirects available buyers from the MLS resale market). Yes, the private bank, not the state, got it right when the going got tough.

Demolishing single homes, or even whole neighborhoods, which have been foreclosed in the more central parts of communities could be the trend if vacant homes continue to be vandalized. Cities like Indio and Chula Vista are putting the screws to neglectful lenders, issuing fines for unkempt properties. Economic fundamentals of the useful life of buildings are again on display as the costs to repair and market homes (and other types of property) at current market prices and under present sales volume will prove greater than the value of a cleared lot in many other cases around areas of California less remote than Victorville.

Re: “Housing crunch becomes literal in Victorville” by The Los Angeles Times