This is the fourth in a series of posts focusing on the Recession in America and the impacts it is having on things other than your 401k and personal finances. Check out the first three posts in this series titled -
Recession in America – What about our pets?
Recession in America – Home Foreclosures
Recession in America – Unexpected Landlords
The Recession in America has had many negative impacts on the housing industry. Whether it be families losing their homes to foreclosure or home owners forced to rent out their homes instead of selling them for a significant loss – the troubled economy is taking its toll. There is also another side effect of the recession for the housing industry. There is a vast number of uncompleted or abandoned subdivisions across America. Some of these developments only have 1 or 2 homes constructed or in some cases only the roads and utilities have been built. Many of these subdivisions had been started at the peak of the housing bubble. Since then, builders and developers have been forced to stop construction on these newer projects – thus abandoning the few homes that may have been built.
On a recent family vacation to Florida, I noticed the large number of new subdivisions that had been started along several major highways in the state. I also observed how many of these newer subdivisions had fewer than 10 homes scattered across many acres of developed land. All the roads had been developed along with several of the utilities. However, they all had one other thing in common – these subdivisions looked abandoned! Each one of these plots of land looked to have had great potential at one time but have been shunned since the recession started. It really does not surprise me that there are many abandoned subdivisions out there – but is a very sad feeling to see things like this. I am sure that one day all of these abandoned properties will be completed – but it could take a really long time. I wish anyone who purchased a home in one of these abandoned subdivisions the best of luck.
I also noticed the same thing over a year ago near our old subdivision in Michigan. While the neighborhood my family lived in was completed, several other developments had been started nearby with only a few homes completed. That is when the economy started heading down and the developers and home builders started pulling out. We were very fortunate to sell our home (when we decided to move south) at a modest gain. I don’t believe that we would have been as lucky to sell our house (for a gain) if it was built in one of these abandoned subdivisions. The few scattered homes in these developments must have lost a lot of their home values.
My wife and I are no strangers to an abandoned subdivision. Our new home we purchased last year was in a newer up and coming area that had a lot of promise. The subdivision was slated to have around 250 homes with several amenities that we were interested in. We purchased our home in the first phase of the subdivision which included around 50 homes. Unfortunately, due to cash flow issues with the developer and the home builder – building has been suspended in our neighborhood. Fortunately, the homes that have been built are all occupied and were placed together instead of spread out like some of the abandoned communities I have seen. Only a few of the roads have been built and the existing homes have filled most of them up. I feel fortunate that the subdivision was designed and developed this way. I am confident that we will see the completion of our subdivision someday – although it may take several years.
It is no surprise to anyone who follows the economy that we overbuilt homes and created a housing bubble that burst. What is frustrating to me is when you see all the new construction that had been going on all at once. Most of the home builders were overextended trying to develop as many properties as possible in the good times. Once the housing bubble burst, they were left with little options in most areas of the country but to pull out and abandoned these unfinished developments. I guess it would have been nice if they could have just worked at completing existing sites before going out and building more.
How has this recession impacted your house or community? Have you noticed abandoned communities in your area?
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There are many empty units in the new subdivisions and developments in our general area. In our town, we have been fortunate that red tape prevented overbuilding and there are the ghost town subdivision you see in the suburbs closer to D.C. and other large cities.
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Where we live we don’t have any new building or communities, so you would think that home values would be relatively stable. Unfortunately, they aren’t and are dropping even further. My parents retired recently and purchased a new home in a development that had plenty of other homes and amenities like golf and a restaurant. The same builder purchased land and started to build a community next door and had to stop the project. My dad now goes over the the new development to fly his model airplanes. I guess it looks like the biggest airport for remote control planes.
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In Australia, where I live, subdivisions are generally done in stages – the whole thing is planned but the roads and services aren’t extended to the new stages until the early stages are close to being sold out. It makes sense re the developers cash flow- why pay for streets which may not be used for years? There are many subdivisions on hold at the moment in Western Australia – but others are doing fine- it depends on the area, the quality of the location and the price. The government has been putting lots of money into first home buyers subsidies – you get around A$20k if you are a first home buyer in WA and buy a new home or a home & land packages – you get less if you buy an ewxisting home so the developers haven’t done too badly here.
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Twenty, thirty years ago we used to see vistas like the one in the photo, all over Arizona. We called them “land fraud.”
Maybe that term isn’t far off-base for the present predicament, eh?
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Bulldoze ‘em and return the land to agriculture or wilderness. It’s time to put an end to the blight of endless suburban sprawl.
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