Won't Sell? Builders Bulldoze New Homes

July 7, 2011

Overbuilding during the housing boom has contributed to price declines in many boom-to-gloom housing markets, experts say. New-home builders continue to struggle up against the low prices of existing homes. And in some cases, they are taking drastic steps by tearing down unfinished homes.

Many unfinished, abandoned homes remain in once-booming housing markets that have now turned sour. In 2009, Guaranty Bank of Austin bulldozed 16 new and partially built homes in Victorville, Calif., which were acquired through foreclosure. KB Home leveled three model homes in Marana, Ariz.

Lennar Corp. recently demolished eight partially built homes in Visalia, north of Bakersfield, Calif., in lots it recently purchased from a a now bankrupt builder. Lennar Corp., however, plans to rebuild on the lots but its decision to bulldoze the empty homes also reflects a change in customers’ housing tastes. Some of the lavish homes were as big as 3,000 square feet with multiple gables and defined entryways.

Lennar leveled the abandoned homes that it purchased from the previous builder to make way for new construction with more desirable smaller homes (the average home size to be 1,800 square feet) and at lower asking prices of $197,500 to $250,000.

"We've adjusted our offerings to fit the needs of the people today," said Charles Schein, a spokesman for Lennar's Central Valley division. Schein said the company had considered completing the unfinished homes but after being abandoned so long, they were no longer salvageable.

Source: “Builder Lennar Bulldozes Unfinished Homes for New Community,” Dow Jones Newswires (July 1, 2011)