Sinking housing market maroons homeowners

In the past year, builders that have filed for bankruptcy include Levitt and Sons in Fort Lauderdale, Fla.; TOUSA Inc. in Hollywood, Fla. and Neumann Homes Inc. in Warrenville, Ill.

Unfinished communities — as was the case with Seapine — are more likely to come from small or medium-size builders because they are more prone to run into financing problems than large builders, said Joe Snider, housing analyst for Moody’s Investors Service in New York. Larger builders, like D.R. Horton Inc., typically won’t leave homes half-finished but will instead build out a phase and stop until demand picks up.

Eric Bryant has been waiting since last June for his upscale Toll Brothers Inc. community in Las Vegas to start filling up.

“Since I moved in, we’ve had one cancellation, 10 homeowners did move in and then no sales since then,” said the 43-year-old real estate agent and tax accountant. He spoke from his home, one of three on the street and 11 in a community designed to hold about 90.

“It’s very quiet, it’s extremely quiet,” he said.

The house looks out over an expanse of rocky desert interrupted at neat intervals by a handful of homes in various stages of completion at the mid-$500,000 and up community. A sign in an adjacent empty lot beckons: “Lot .49 Future home of ——————.”

“I know it will turn around, I don’t know how long it will take. I would like to see growth, but I don’t see it any time in sight for this community,” Bryant said.

Horsham, Pa.-based Toll Brothers did not return calls for comment.

In Philadelphia, where overbuilding has been described as moderate, a glass-encased condominium building called Nouveau promised residents a modern, upscale urban lifestyle. Units were originally priced at $600,000 to $1.5 million.

But since Todd Zaki Warfel, 36, moved in last July, it’s been lonesome: Only four of the building’s 16 units are occupied.

He’s also had tussles with developer CREI LLC, which he said left some areas unfinished for months. The lobby is finally getting tiled and missing glass is being replaced. CREI said it had to replace an architect and there was an incorrect shipment of glass from the manufacturer in September.

When fewer than half of the units in a project have been sold, the developer usually retains control of the homeowners association, diminishing the clout of residents if they wish to get things done.

As for Seapine, Egg Harbor Township officials said they’ve notified the insurers who issued $2.3 million in construction bonds to finish building the streets and other infrastructure or pay the town to do the work. They said they would sue if necessary.

Bank of America has taken over 180 of the lots at Seapine while 22 properties are in litigation over liens, the builder’s attorney said.

Bank of America has received several offers for the lots, Bank of America spokeswoman Shirley Norton said, but that it will be up to whoever buys the properties to decide what to do with the development.

Even a quick sale would not guarantee a quick fix in today’s market. Builders are being squeezed by tightening credit, weak buyer demand and cash flow problems as banks in some cases pressure them to pay down more of their loans as land values decrease, said Dave Seiders, chief economist for the National Association of Home Builders.

That means Denise Urtubey might have to wait a while before Seapine becomes a real community filled with neighbors and kids.

“I don’t know what’s going to happen to the neighborhood,” she said, wistfully. “It’s kind of sad that we won’t have all the people we were expecting to have.”

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