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California--Wrecking Brand New Houses

Discussion in 'Demolition' started by Wolf, May 6, 2009.

  1. Wolf

    Wolf Senior Member

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    Housing crunch becomes literal in Victorville
    A bank cuts its losses on a failed 16-unit project by having the homes demolished.
    By Peter Y. Hong

    May 5, 2009

    Curtis Forrester moved into a brand-new house in Victorville last week, but there was little time to enjoy the Jacuzzi and designer kitchen. He was there only to see it destroyed.

    Just a few days after his arrival, the two-story residence and three other luxurious model homes were crushed and hauled off for scrap, the latest fallout from Southern California's real estate crash.

    The homes were part of a planned 16-unit project in this community 100 miles north of Los Angeles. The Texas bank that owns the failed development decided to demolish the houses, a cheaper alternative to completing and selling them.

    Forrester was hired to keep thieves away and help sell off the fixtures. "All my life I've been building things," said the 59-year-old construction worker. "It's kind of fun tearing them down."

    The Victorville demolition is one of the most dramatic ends to a bad bet made during the housing boom, but abandoned developments have become an all-too-common sight in California. Nearly 250 residential developments totaling 9,389 homes have been halted across the state, according to one research firm.

    The developer of the Victorville project had hoped to sell the houses for more than $300,000 as they were being built last year, Forrester said. But reality quickly diverged from that vision. Home prices have tanked faster in San Bernardino County than any other Southern California county during the downturn. In March, the median home sale price for the county was $160,000, down 43% in a year, according to the San Diego-based research firm MDA DataQuick.

    Officials of Guaranty Bank of Austin, Texas, which took over the development last year, were unavailable for comment. But Victorville city spokeswoman Yvonne Hester said the bank decided not to throw good money after bad.

    "It just didn't pencil out for them," she said. "They'd have to spend a lot of money to turn around and sell the houses. They just made a financial decision to just demolish them."

    The development was in a part of town remote even for Victorville, a wind-swept high desert city of about 100,000 residents. A dozen of the homes were in various stages of construction. Some had frames erected, and a few others had drywall hung, said Jorge Duran, Victorville's code enforcement manager.

    The four finished homes, however, were richly appointed with granite countertops, whirlpool bathtubs and dual-pane windows.

    Building permits were issued in September 2007, Hester said. Home prices were already falling, but in San Bernardino County, the median price that month was still a robust $325,000, according to DataQuick, enough to keep fueling hope -- or denial.

    Construction halted in the summer of 2008, and the homes became a nuisance, attracting vandals and squatters, Hester said. The city first cited the developer for failing to maintain the property in July, Hester said.

    "People were taking sinks, the air conditioners. For someone who wanted to do no good, it provided an opportunity," she said.

    The bank repossessed the development in August, Hester said. Demolition permits were granted April 9.

    The wrecking crew showed up near the end of the month. Forrester was not officially part of the demolition team. His nephew, who got him the job, operated the backhoe that tore through the houses with the destructive ease of a mechanical Godzilla. Forrester's job was to chase vandals away and sell what he could to bargain hunters.

    He slept in the model homes until, one by one, they were gone. By Friday, the crew was on the last house -- a hulking two-story model with a floor plan blown open by demolished exterior walls.

    The place looked as if it had been hit by a hurricane, but it was only the splatter of the burst housing bubble. Folks driving by on U.S. 395, the highway from Hesperia to Reno, saw the wreckage and stopped by to see what they could salvage.

    Forrester was happy to oblige them. Whatever they would take "saves the dump fees," he said. "I gave one guy a granite counter for $40, gave another dual-pane windows for $20 a piece."

    A fellow with a dually pickup and trailer showed up asking for some studs. He declined to be interviewed, nor did he want to talk about what he would use them for. Used building materials are prohibited for use in new construction, so lumber from the site would have to be for personal projects.

    Forrester sold him a trailer full of 2-by-4s for $40.

    A bit later, Marla Bowers and Candy Sweet drove up, also looking for lumber. Bowers said she wanted to build a shed. Sweet needed to repair some termite damage.

    "A dollar for clean ones, 50 cents if they're dirty," Forrester offered. When Bowers hesitated, Forrester lowered his price. They settled on a six-pack of Corona.

    Ron Willemsen, president of Intravaia Rock and Sand, the Montclair company handling the demolition, said he was glad to see people finding uses for the materials. But wrecking a pristine house troubled him.

    "It's a waste of a lot of resources and perfectly good construction," he said.

    Willemsen, whose family has run the business for 50 years, said it was the first time the firm had demolished a new housing project to return a potential neighborhood to soil.

    Typically, the company demolishes vacant properties when they've outlived their usefulness and other construction projects are set to take their places.

    His firm also recycles the demolished structures, as it will these former dream homes. The concrete will become base material for parking lots and roads, the wood chipped into mulch.

    "Have you seen the side of the 210 Freeway?" Willemsen said. "That's our product."
     

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  2. bear

    bear Senior Member

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    RoP was that you? Just kidding. That thing about not being able to re-use stuf is kind of backwards in a state like CA. I would figure all the tree huggers wanted to recycle and stuff like that?
     
  3. CM1995

    CM1995 Super Moderator

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    At first read of this article, I took away the conclusion this doesn't make any sense and why would a bank decide to do this. I watched a few of the videos on the demo and read a few articles. http://www.wikio.com/video/1078475

    Here is what I think is the rest of the story:

    It seems that vagrants and thieves have been taking whatever they could out of these houses. Now when a thief cuts and pulls copper wiring, you basically have to start over, just with more labor and material than it would cost to do it initially. Same with plumbing, HVAC,etc. Then add any structural and drywall, painting, finishes and it gets expensive to put it back like it was. Plus they would have to disclose what was done.

    The City of Victorville was "fining the Bank daily" for the unfinished houses. I have yet to read what these fines were, they were probably fairly substantial. The fines that have been piling up would be job costed and included in any final "pencil work" on whether or not to save or demo these houses.

    Property taxes - I am sure they are rather high in CA. I don't know the property tax structure in CA maybe someone can chime in. In AL a company pays twice as much (Class II property) than someone who owns it personally or has a homestead. A bare lot would have a lot less property tax valuation than a finished home or "almost" finished home. I wonder it the bank will take up the civil improvements and take the land back to an AG zoning for tax reasons?

    The Bank probably took all the circumstances above in to factor on their decision. The news article sways to the opinion (no more journalistic integrity) that they are tearing them down because they are worth "nothing" due to the "Housing Depression". Pure baloney. This was a business decision that involved all the factors for this project. Looks like demo came in as the cheapest option.:cool2
     
  4. 544D10

    544D10 Well-Known Member

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    This is exactly why I've been laid off for 2 months, I work on jobs like this only building them not tearing them down.
     
  5. Wolf

    Wolf Senior Member

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    Yeah, CM 1995 has it right. Demo is the only way to go. Sounds like you should think about getting into demo as an alternative to building new stuff in this environment.
     
  6. digger242j

    digger242j Administrator

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    Anybody remember the Mel Gibson movie "Lethal Weapon 3"? (Filmed in 1992.)

    From IMDB:
    This is news now because of the general state of the economy, but it's not anything unheard of...

    (I knew Wolf would be all excited though. :) )
     
  7. curly

    curly Well-Known Member

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    Median house price of 140K in LA, my god save the banks houses prices are almost reasonable!!!
     
  8. cps

    cps Senior Member

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    Thats the worst case of the times i've seen yet!
     
  9. GGDOZERINC

    GGDOZERINC Active Member

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    I saw this same article on the news last night, I cant believe they would tear down house that they already have hundreds of thousands of dollars invested. It just dont make good sense, but what do I know I just move dirt.
     
  10. stumpjumper83

    stumpjumper83 Senior Member

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    what you dont know is what they are doing with the land. If they sold it to a company that wanted a mall there, or something else then the houses would have to go.

    As my father once told me. "figures don't lie, but liars figure!" Thats how I look at journaluists.
     
  11. BigMachine

    BigMachine New Member

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    Man what a waste.