California Housing Crisis Takes a Star Turn
The Los Angeles Times reports today: As projects grind to a halt, home sites turn to wasteland (HT Calculated Risk). A key source of insight into the story is HousingCrisis.com sister company Hanley Wood Market Intelligence.
Click on image for access to LA Times article.
It’s a scene not uncommon throughout California, as residential construction grinds to a halt under the dual weight of the credit crunch and the housing crisis: a rusty chain the only barrier between the community and a half-built structure in Hollywood; a bare dirt lot in Pasadena; old stoves amid the trash at the site in Oakland.
“I hear hacking and see scary bonfires in the middle of the night,” said Don Johnson, a retired Coast Guard employee who lives near the defunct Oak Knoll Naval Medical Center in Oakland.
Nearly 250 residential developments with a combined total of 9,389 houses and condominiums have been halted in California, according to research firm Hanley Wood Market Intelligence. The units, worth close to $3.5 billion, were in various stages of development.
Now, many are in bankruptcy or have been foreclosed by lenders. Developers have halted sales on an additional 370 new-home developments — about 30,000 units worth $11.9 billion.
“It’s a sad state of affairs,” said Greg Doyle, regional director of Hanley Wood.
The ramifications of the paralysis–similar to the cost of health problems that are ignored–are that the costs of inertia redouble in direct opposition to the upside multipliers of new residential construction.
Here’s an observation on the issue from a more operational perspective, from Patrick Duffy, who writes the HousingChronicles blog.
One primary reason I’ve been banging the drum that there just wasn’t enough proper due diligence done on new home projects during the boom (or what was done could be considered fraudulent due to the manipulating of data leading to patently false conclusions) was the impact on these half-finished projects to surrounding neighborhoods.
Whether in Hollywood, Oakland or out the suburbs of the Inland Empire, everyone suffers for the actions of relatively few people. And while many projects were ceased simply because of a lack of funding, some should never have been built in the first place due to lack of demand at the price points required to buy the land.
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Pasadena Coastal homes info…
Great info, keep up the good posts!…