Wikinvest Wire

More cost effective to wreck than sell

Wednesday, May 06, 2009

The story about a Texas bank deciding to demolishing foreclosed homes in California was everywhere yesterday, but it shouldn't be that surprising - they needed a lot of work.

When they start bulldozing finished houses into the ground because they just can't sell them, then that will be real news.

Some details are provided in this report at the Wall Street Journal:
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."
We've driven through that area many times on the way from Southern California to Las Vegas, a few times when the housing bubble was at its peak, and almost every time we wondered why anyone would ever pay $300,000 or more to live in Victorville.

There's also a related story in the LA Times.


staghounds said...

It would be interesting to see genuine, no reserve auctions of foreclosed properties and repossessed cars. All the creditors are holding on to the goods, though. Tells me that they expect bailouts and inflation to make the stuff a better thing to hold than the cash it would bring.

When people start selling things for what the traffic will bear, I'll believe the hard times are genuine.


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