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The battle to complete unfinished housing developments

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They’re scattered all across the country, sitting like apocalyptic metaphors for the post housing crash world to see. Half built residential and condominium developments as well as mixed use projects that have taken an ugly turn from their original plan.

In so many cases homeowners have been hung out to dry either after the smack of the Bankruptcy judge’s gavel or by developers who simply saw the crash coming and made an abrupt change in direction in an attempt to avoid catastrophic failure. Left in their wake are confused, angry and victimized homeowners who don’t fully know who to blame and likely don’t have the resources to pursue a remedy even if they did.

No easy answers

There are no easy answers in one of the housing market’s quiet, residual messes. Unfinished developments are everywhere and they sport weathered ‘for sale’ signs much like modern day tumbleweeds.

The difficulty for homeowners caught in the crossfire of these failed projects is who to blame and what to lobby for in what may come next for their communities. In so many cases those residents who were early in and hoping for instant equity growth got caught frozen in time when the crash came in 2008.

Now they watch, wait and pray that their respective areas will slowly begin to plod forward within the covenants and guidelines that they purchased their properties under. Sadly in today’s new world of housing, the pre 2008 world and its path have been essentially wiped clean.

Developers took one of two paths

The big distinction in these types of developments is whether they’ve changed directions or stalled completely as a result of a developer’s financial failures or because a developer simply decided they couldn’t continue on a given path and survive. Attorneys have been warming up in the bullpen since the crash began on the latter and now have ample ammunition to pursue those developers who changed or violated their own original covenants.

How courts will rule in the long run is anyone’s guess but there are numerous platted communities across the country that have undergone a developer’s plan change where homeowners are seeking immediate injunctive relief. In several cases, courts have forced developers back into their original plans. In others there were legal compromises between the developers and the homeowners who both needed to have their communities finished.

What now for lost equity?

So what’s the best path for those owners who got in early and now stand to lose a significant portion of their equity by the changes that today’s economy has forced on them? It’s become a balancing act for homeowners who have been forced to juggle fighting for the continuity of what came before with the financial reality of what comes next.

If the original developers are still in place, it usually allows for some form of compromise that can salvage some of what the first homeowners have invested. If developers have gone bankrupt or left the business, homeowners have fewer choices and obviously stand to be damaged at a much higher level. In these cases, simply getting the neighborhoods completed may be a more palatable outcome than letting their development get branded by years of vacant lots and whispers of things that are more damaging than lesser priced homes being built.

Either way, the housing crash that’s dominated the first 10 years of the 2000’s is a scar that will be felt and seen for years to come.

Realtor, Speaker, former Indianapolis radio personality. Least prettiest person ever on HGTV. Crashed in a helicopter and a Cessna 182. Seven lives left. Blessed by an amazing family!

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13 Comments

13 Comments

  1. Joe Manausa

    March 9, 2011 at 10:34 am

    Well done Greg. This is a mess that will take many years to absorb.

    “There are no easy answers in one of the housing market’s quiet, residual messes. Unfinished developments are everywhere and they sport weathered ‘for sale’ signs much like modern day tumbleweeds.”

    I really feel for homeowners in these areas that are trying to stay there. Nothing invites vandals more than a bunch of half-finished homes.

    • Greg Cooper

      March 9, 2011 at 11:51 am

      Joe,

      Thanks for your kind words……this problem is truly one that will prolong the housing crisis which is why I’m an advocate of getting these things finished out and moving forward. Othewise they can breed exactly what as said (vandalism) as well as more foreclosures, a stigma on an entire geography and possibly worse. Appreciate you contributing!

  2. Brian

    March 9, 2011 at 2:11 pm

    Here is an interesting satellite visual of unfinished developments in Florida:

    https://www.boston.com/bigpicture/2010/09/human_landscapes_in_sw_florida.html

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

#JobOpenings

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Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.

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Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

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