By VICKI GERSON
The collapse of the housing market has caused numerous heartaches and left promises unfulfilled for some homeowners and cities and towns across the nation.
Some builders and developers have left a trail of unfinished houses and projects, bankruptcy filings, roads to nowhere, homeowners with subcontractor liens on their homes and homeowners forced into foreclosure.
Partially constructed and/or mostly deserted condo structures have been dubbed "ghost towers," and some developments plagued by vacant units are seeing renewed interest with the downward spiral in prices.
Illinois
Clublands is a 600-acre development conceived by Neumann Homes. The builder planned to build 950 homes priced from $300,000 to $400,000 in the Village of Antioch, a suburb close to the Wisconsin border. Once the 35th-largest builder in the nation, the company went bankrupt, and the clubhouse, three pools and sand volleyball court were never built. Some homes are still in housewrap, with mounds of dirt on some unfinished lots, while some others were completed but sit empty.
NeuHaven, a separate 415-home Neumann Development project in the town that was also left incomplete — and a planned park with a Little League-sized ballfield, a soccer field and a tennis court — will reportedly never be built.
Because both developments — geared to young families — have impacted the Village of Antioch, the Village’s Web site has a separate tab with current updates about these two developments and what is being done to try to solve the problems. On June 11, 2009, contracts were awarded for improvements in NeuHaven to complete curbs and gutters, sidewalks, underground utilities and pavement patching. Surfacing was also completed for the different phases.
Residents continue to express concerns about the number of vacant homes in both communities. As a result, the village is in contact with banks that have an interest in those properties and is trying to find a contractor to maintain those areas. Neumann’s bankruptcy has had such an impact on the village that there are frequent updates on the village’s Web site, including a notice that the village received the remaining $142,000 of the $1.1 million it was slated to receive through the bankruptcy proceedings.
Arizona
Laughlin Ranch, marketed as a master-planned golf community in Bullhead City, Ariz., is situated 10 minutes from Laughlin, Nev., gambling and the Colorado River. Conceived by David Lords, the project began in 2005 when Lords developed lots for sale. Four builders participated in the project, and the majority of the 400 homes that were built — out of the 3,000 homes that were planned — were constructed by Nationwide Homes. Today, there are hundreds of lots still undeveloped and fewer than 200 homes occupied.
On April 5, 2007, Lords sent a letter to homeowners stating that he was working with lenders and attempting to refinance loans for the development. Later that year he filed for bankruptcy.
Carra Riley, a real estate consultant for buyers and sellers, said of the development, "Dreams were shattered. I had the first 38 people in line to purchase a home here. These people paid $5,000 for a reservation to wait for this subdivision to open," she said, with some waiting over a year for the construction to begin.
Nationwide Homes’ auctions started in March 2007, with huge banners posted and a sales trailer placed at the entrance of the subdivision stating "AUCTION HOMES."
"I can’t even explain how upset the homeowners were," said Deborah Everly, who purchased two homes at Laughlin Ranch and resides in one of them. "Huge yellow signs were placed up and down the parkway stating they were auctioning Laughlin Ranch — not (specifically) homes by Nationwide Homes — just Laughlin Ranch. The homeowners demanded a meeting and the signs were changed." …CONTINUED
Everly said that one of the marketing pieces used by Lords to attract buyers highlighted a beach house and dock — she said she purchased two homes with extra deep boat garages, believing there would be a dock on the Colorado River.
The homeowners association was putting money aside from the homeowners’ dues for a beach house, she said, which was never built.
Today, three streets at the beginning of the development on the front nine holes of the golf course are paved. Other roads are now completed due to the bankruptcy court order, but there are no houses or construction on them.
Near the back nine holes of the golf course, gates have been put in place to keep people out. And homeowners are reportedly footing the bill for landscaping in an area devoid of housing. Some of the completed homes are sitting vacant and aren’t selling.
"Values in the subdivision have dropped 50 percent to 60 percent. Many of us now have mortgages higher than the values of our homes, and we are watching foreclosure after foreclosure take our values lower," Everly said.
Richard Brindisi was one of the first homeowners to move into the development. There are about 50 homes on his street and about 20 of them are unoccupied, he said.
There are streets with empty lots. Brindisi points out: "There were supposed to be four golf courses constructed and now only one is in place. Acres and acres of commercial space were also available. The preliminary site work was done, including an unpaved road going through a segment of the property."
Questions are being raised about the homeowners association budget, and homeowners have compiled a 50-page complaint that they submitted to the state real estate commissioner in Arizona — homeowners reportedly want another management company to step in.
"We are totally unaware that a complaint has been lodged against the Laughlin Owners Association and that it has been sent to the Arizona Real Estate Commissioner," said Dale Collins, manager of D & E Management, which has managed Laughlin Ranch since 2004.
As to the complaints about the security and landscaping contracts, Collins points out that landscaping isn’t under a contract.
"Landscape workers are paid hourly," he said. "There were three bids on the security contract and we took the bidder who was significantly lower."
Collins noted that Laughlin Ranch isn’t the only development site that has experienced foreclosures. "We were part of a national trend and couldn’t escape it."
A new day may be dawning for Laughlin Ranch, which recently emerged from bankruptcy after two years.
The community will now be known as Laughlin Ranch Renaissance, with David Lords being the equity owner of the development. Avion Holdings, approved by the bankruptcy court, will be managing Lords’ business, which is to sell lots.
"Laughlin Ranch Renaissance is now moving forward in their plans to market and sell property and will be seeking financing to sell the lots it continues to own. It will also continue to operate the golf course and the spa and grill," Collins said. …CONTINUED
He emphasized that D & E Management was not a part of the development, construction or financing of the former Laughlin Ranch — the owners association is freestanding and was kept outside the bankruptcy proceedings.
Florida
At the other side of the country, Alisha Marks moved into Midblock at Midtown, a high-rise Miami development, in January 2009. It is one of three buildings in the newly built "Midtown" neighborhood.
"When I first moved here in January, the pool, gym and the hallways used to be empty and the building was about 30-40 percent occupied. Now, the building is about 80 percent occupied and people are working out. Although I liked it when the building was quiet, it’s nice to see the building take on a real ‘neighborhood’ feel."
According to Marks, the builder has discounted prices of empty units to stimulate sales. There is also the appeal of the up-and-coming neighborhood, which is the selling point for some buyers, she said.
As prices continue to drop, the 80 residential buildings that went up in downtown Miami from 2003-08 are starting to fill up. Ron Shuffield, president of the residential brokerage firm EWM, told Marks that the Miami brokerage community is seeing about 400 closings a month in downtown Miami.
Mimi Scott, an actress, writer and psychologist, was one of the first tenants to move into Radius Tower in Hollywood, Fla., in December 2007. She took a large corner condo in the 331-unit building and found the building to be lacking occupants at first.
"It was ghastly quiet, and I didn’t like it," she said. "There are still more empty than full units on my floor."
She purchased her unit for $435,000, and the prices have plummeted dramatically, though the units are selling. "A corner unit like mine recently sold for $295,000," she said. "The builder has had at least one auction to sell the remaining units, and now 296 of them are sold," she said.
New Jersey
In New Jersey, some builders — like Carlo Zimatore, president of Artiste Construction — are turning to auctions to sell their units.
"I was trapped. There was no way I could have a conventional sale due to my national lender. Before March 2009, I needed to have 26 percent under contract for sale before the bank would release one dollar to me. On April 15 the rule changed to 51 percent, and on May 15 it was 71 percent." Zimatore said other national banks were taking the same position — and those were the only banks lending to large or small condo developments.
As a result, Zimatore said he hired Max Spann, Real Estate & Auction Co., a nationwide auction company, to auction off 20 of his 24 luxury condos on Carlson’s Court in North Bergen, N. J.
On Aug. 9, in a little more than 60 minutes, condo units that had been for sale for up to $500,000 sold for an average $316,000 a piece.
"It makes sense for builders to auction now instead of carrying costs for these condo buildings," says Bob Dann, vice president in charge of operations for the auction company. "With an auction, you create a sense of opportunity and urgency — and people want to buy. That’s why all 20 units sold."
Vicki Gerson is a freelance writer in Illinois.
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