This is great! If enough vacant homes were destroyed in surplus markets,the imbalance would disappear.
It’s all about supply & demand. Only when supply & demand come into balance will prices stabilize
ice weasel
on May 1, 2009 at 6:33 am
Very interesting and I’ve been waiting to see if this would happen.
It’s difficult to believe that the barren property is worth more than it would be if brought up to code but that’s short term thinking for you. And here I thought banks were in the investment business.
NateTG
on May 1, 2009 at 7:00 am
“It’s difficult to believe that the barren property is worth more than it would be if brought up to code but that’s short term thinking for you.”
Except that barren property has no maintenance costs and less liability issues. Considering the overbuilt situation, it’s probably a good move in the long run.
Frisbee
on May 1, 2009 at 7:11 am
Wouldn’t the bank be better off simply selling the homes for $50k (or whatever price moves a partially completed house in a glutted market)? That makes it someone else’s problem, and you recoup some of your losses.
I wonder how much of a tax write-off the bank gets on this destruction?
Former RB Resident
on May 1, 2009 at 7:30 am
@frisbee,
I think Mish says something in one of videos about the bank being fined every day because they weren’t up to code in some way. (Maybe a construction site rule about fencing or something.) So, the bank decided to cut their loss. Who would want those homes? 4 houses in the middle of nowhere with no neighbors? Pass.
dryfly wrote on Wed, 2/25/2009 – 9:47 am reply
Recently I’ve heard a number of stories about lenders holding REOs off the market, but I can’t confirm this. – CR
—-
Ask Jim the Realtor. He’ll confirm. He has a huge backlog of Countrywide REOs that he has permission to list on the MLS.
Rob Dawg | Homepage | 02.25.09 – 11:04 am | #
—-
I talked to a Realtor in St Paul who does nothing but REO – he told me the banks have TONS of REO currently held off the market – he sees their teaser lists – they can’t process it fast enough – don’t have the bodies. Plus every property has to pass ‘code’ prior to selling even if offered as is. It becomes a huge Catch 22 – you can pay for the house but it doesn’t clear title until it passes code. Once the bank has the cash they have no incentive to fix to code & the ‘new-not-yet-really-owner’ can’t authorize or ‘permit’ the fix up. Some of these houses have negative value as a result. Significantly negative. If you were a bank would you hurry to put properties like this on the market until this regulatory hassle is cleared up? Star Trib ran an article on it last week & the realtor I talked to confirmed.
This should make Dawg feel good that there are places as screwed up or worse than California.
—-
Anonymous
on May 1, 2009 at 8:33 am
“Wouldn’t the bank be better off simply selling the homes for $50k (or whatever price moves a partially completed house in a glutted market)? That makes it someone else’s problem, and you recoup some of your losses.”
In Detroit they’re paying people to take the homes.
This is simple, destroying it is cheaper than getting someone to take it. Finishing it costs more than it’s worth and the city is fining on a daily basis.
You don’t want blight and that means the banks may bulldoze if nobody takes the property.
Aztec
on May 1, 2009 at 8:39 am
Can we please do this to the sea of rooftops around I15?
JAP
on May 1, 2009 at 9:47 am
Who would want those homes? 4 houses in the middle of nowhere with no neighbors? Pass.
Former RB Resident | May 1st, 2009 at 7:30 am
———————————————-
Exactly. “Let’s throw some McMansions up right in the middle of a desert… somebody is bound to buy them.. housing is HOT!”
Pure GREED and stupidity.
arizonadude
on May 1, 2009 at 10:00 am
It is to bad they couldn’t somehow move these homes to another location.This seems totally wasteful.
Kwaping
on May 1, 2009 at 10:33 am
That vid reminds me of how much I’d like to be a heavy equipment operator. Imagine how much fun that’d be!
jamie
on May 1, 2009 at 10:43 am
Pruitt-Igoe all over again: http://www.youtube.com/watch?v=t29fgA5M7VA
Obviously the people in the tent cities all over Cali probably can’t afford these houses, but it seems a bit unfortunate that at a time of rising homelessness we’re destroying housing. The British shipped boatloads of food from Ireland during the Famine, and a lot of economic value was created by this, because Irish beef and grain was able to find a market, but it had quite bad repercussions on people in Ireland itself…
These weren’t just halfway-built houses. As I understand it, the streets weren’t paved, the water/sewer may not have been working, and it’s unclear what permits the land had. So individual owners would have been screwed.
The bank owned the entire tract of land; they would have had to sell it to a construction company to make it work…and they don’t even want to make the loan on that, even if some sucker company bites.
I’m sure there will be houses there eventually.
-Erica
Genius
on May 1, 2009 at 11:24 am
Kwaping: I hear it’s fun for the first hour or so, and gets old fast after that. Although back when I used to frame during college I could do demo all day and not get bored.
I’ve been waiting until they started to plow homes over. I suspect we’ll see much more of this in the future. It seems like a match and a little bit of gasoline would have been easier.
Apparently there are 20 other homes in Temecula to be demolished as well.
Kwaping
on May 1, 2009 at 12:08 pm
Genius: “I could do demo all day and not get bored” + “It seems like a match and a little bit of gasoline would have been easier”
I think I can see why you never got bored, lol.
SDGal
on May 1, 2009 at 12:22 pm
Too bad they razed them. I could have moved my cult in.
Wizard
on May 1, 2009 at 12:44 pm
Even more sinister. Understand that local Victorville press, while published raizing, has remove article from their website.
REIC pressure?
HappyRenter
on May 1, 2009 at 3:34 pm
When you see something like this – especially as a renter, it just stings.
I realize that the size, location and cost to bring them up to code prevents them from being economically viable, but I agree with other posters….it just seems like a horrible waste. This was the only possible outcome.
We were absolutely expecting this to happen eventually, but that doesn’t spare the shock when you actually watch it happening on video.
Everyone who wants a house still doesn’t have one. Despite the fact that I’d never buy a house in these areas, it still feels like a giant flap in the face. I don’t know why, really…
This is great! If enough vacant homes were destroyed in surplus markets,the imbalance would disappear.
It’s all about supply & demand. Only when supply & demand come into balance will prices stabilize
Very interesting and I’ve been waiting to see if this would happen.
It’s difficult to believe that the barren property is worth more than it would be if brought up to code but that’s short term thinking for you. And here I thought banks were in the investment business.
“It’s difficult to believe that the barren property is worth more than it would be if brought up to code but that’s short term thinking for you.”
Except that barren property has no maintenance costs and less liability issues. Considering the overbuilt situation, it’s probably a good move in the long run.
Wouldn’t the bank be better off simply selling the homes for $50k (or whatever price moves a partially completed house in a glutted market)? That makes it someone else’s problem, and you recoup some of your losses.
I wonder how much of a tax write-off the bank gets on this destruction?
@frisbee,
I think Mish says something in one of videos about the bank being fined every day because they weren’t up to code in some way. (Maybe a construction site rule about fencing or something.) So, the bank decided to cut their loss. Who would want those homes? 4 houses in the middle of nowhere with no neighbors? Pass.
From Calculated Risk:
dryfly wrote on Wed, 2/25/2009 – 9:47 am reply
Recently I’ve heard a number of stories about lenders holding REOs off the market, but I can’t confirm this. – CR
—-
Ask Jim the Realtor. He’ll confirm. He has a huge backlog of Countrywide REOs that he has permission to list on the MLS.
Rob Dawg | Homepage | 02.25.09 – 11:04 am | #
—-
I talked to a Realtor in St Paul who does nothing but REO – he told me the banks have TONS of REO currently held off the market – he sees their teaser lists – they can’t process it fast enough – don’t have the bodies. Plus every property has to pass ‘code’ prior to selling even if offered as is. It becomes a huge Catch 22 – you can pay for the house but it doesn’t clear title until it passes code. Once the bank has the cash they have no incentive to fix to code & the ‘new-not-yet-really-owner’ can’t authorize or ‘permit’ the fix up. Some of these houses have negative value as a result. Significantly negative. If you were a bank would you hurry to put properties like this on the market until this regulatory hassle is cleared up? Star Trib ran an article on it last week & the realtor I talked to confirmed.
This should make Dawg feel good that there are places as screwed up or worse than California.
—-
“Wouldn’t the bank be better off simply selling the homes for $50k (or whatever price moves a partially completed house in a glutted market)? That makes it someone else’s problem, and you recoup some of your losses.”
In Detroit they’re paying people to take the homes.
This is simple, destroying it is cheaper than getting someone to take it. Finishing it costs more than it’s worth and the city is fining on a daily basis.
You don’t want blight and that means the banks may bulldoze if nobody takes the property.
Can we please do this to the sea of rooftops around I15?
Who would want those homes? 4 houses in the middle of nowhere with no neighbors? Pass.
Former RB Resident | May 1st, 2009 at 7:30 am
———————————————-
Exactly. “Let’s throw some McMansions up right in the middle of a desert… somebody is bound to buy them.. housing is HOT!”
Pure GREED and stupidity.
It is to bad they couldn’t somehow move these homes to another location.This seems totally wasteful.
That vid reminds me of how much I’d like to be a heavy equipment operator. Imagine how much fun that’d be!
Pruitt-Igoe all over again: http://www.youtube.com/watch?v=t29fgA5M7VA
Obviously the people in the tent cities all over Cali probably can’t afford these houses, but it seems a bit unfortunate that at a time of rising homelessness we’re destroying housing. The British shipped boatloads of food from Ireland during the Famine, and a lot of economic value was created by this, because Irish beef and grain was able to find a market, but it had quite bad repercussions on people in Ireland itself…
These weren’t just halfway-built houses. As I understand it, the streets weren’t paved, the water/sewer may not have been working, and it’s unclear what permits the land had. So individual owners would have been screwed.
The bank owned the entire tract of land; they would have had to sell it to a construction company to make it work…and they don’t even want to make the loan on that, even if some sucker company bites.
I’m sure there will be houses there eventually.
-Erica
Kwaping: I hear it’s fun for the first hour or so, and gets old fast after that. Although back when I used to frame during college I could do demo all day and not get bored.
I’ve been waiting until they started to plow homes over. I suspect we’ll see much more of this in the future. It seems like a match and a little bit of gasoline would have been easier.
This info also showed up on sdlookup:
http://www.sdlookup.com/Forums/General/tabid/57/forumid/270/tpage/1/view/topic/postid/65703/Default.aspx#65703
Apparently there are 20 other homes in Temecula to be demolished as well.
Genius: “I could do demo all day and not get bored” + “It seems like a match and a little bit of gasoline would have been easier”
I think I can see why you never got bored, lol.
Too bad they razed them. I could have moved my cult in.
Even more sinister. Understand that local Victorville press, while published raizing, has remove article from their website.
REIC pressure?
When you see something like this – especially as a renter, it just stings.
I realize that the size, location and cost to bring them up to code prevents them from being economically viable, but I agree with other posters….it just seems like a horrible waste. This was the only possible outcome.
We were absolutely expecting this to happen eventually, but that doesn’t spare the shock when you actually watch it happening on video.
Everyone who wants a house still doesn’t have one. Despite the fact that I’d never buy a house in these areas, it still feels like a giant flap in the face. I don’t know why, really…