More Bad NJ News

Stories about half finished communities ghost-towns in Nevada, Arizona, California and Florida have been common for the last year now. Today I came across an example from New Jersey. While we did not have the huge growth of other areas of the country, we still had alot of new development all throughout the state.

At the new community of Seapine Estates, street names like Sea Foam Drive and Shoreline Road are meant to evoke a feeling of coastal tranquility. Instead, the two dozen or so residents of this New Jersey Shore development, near Atlantic City, feel anything but peace. The Pennsylvania builder went bankrupt last summer and halted work, leaving open foundations, unfinished homes and empty streets that have invited outsiders to dump trash, spray graffiti and race cars.

In other parts of the country these communities are becoming increasingly dangerous places. And the early buyers are stuck - properties are losing value and they have no recourse.

... America's housing market has foundered, homeowners who bought into newly rising projects at just the wrong time have found themselves marooned in stalled, abandoned or largely unoccupied developments with little place to turn, placing a strain on them and municipalities forced to pick up the pieces.

Experts say it's one of the least examined aspects of the housing downturn, and one that has struck many parts of the country, from areas like Las Vegas, which experienced rampant speculation and overbuilding, to cities where construction was more restrained such as the Jersey Shore and Philadelphia.

Many times these new developments are isolated from the rest community - on the outskirts of an established town. Once in a while they are giant eyesores in the middle of a community. When they are easily viewable and accessible other residents will push for something to be done about a property and also notify authorities when they see anything questionable occur. Local residents will also prevent "Bandos" or squatters who now live in abandoned homes. In semi-established communities, stories abound of other residents taking care of the properties so as not to allow the area to deteriorate. There are stories about townships taking care of swimming pools in abandoned communities to stop mosquito problems. These unfinished developments also require even more police and fire protection. Finally, there are stories involve criminal groups going in and removing everything of value from the unfinished or abandoned properties.

... Ken Bachman, 37, who lives on a half-empty street in Seapine, feels trapped. When he leaves the house every day, he has to look at an unsightly, unfinished home across the street. Bankrupt Elliott Building Group of Langhorne, Pa., had planned more than 200 houses in the development with prices starting around $300,000, but residents say the community is only about a fifth occupied.

"It's an undesirable place to live right now," Bachman said. "Homes have been on the market for sale in here for over a year and they're just not selling, because who wants to move into a development that's bankrupt?"

Beside the safety issues I stated above - there is also the depreciation of value to the area. People were paying $300,000 and up to live in a great community with wonderful amenities they will never see - private pools, community centers, beautiful landscaping are among the most common . This will also cause a decline the property values. The development lost some of its value the day the builder filed bankruptcy. If a new developer were to come in quickly the value could be restored. However, the deterioration and safety issues will also aid in depreciating the property values.

... At the unfinished Seapine Estates, Denise and Kevin Urtubey, parents of a toddler, worry about the safety of their daughter. Cars have raced down the street in the middle of the night; a couple was found having sex toward the back of the development; tubs and other debris have been dumped in empty lots.

"It wouldn't have happened if the neighborhood's completed. It's not a dead-end street. It's just that nobody's back there," said Denise Urtubey, 27.

Like abandoned and foreclosed homes, unfinished houses and projects are not merely community nuisances. They also contribute to the glut of inventory dragging down the market.

How long will a family stay there. Areas like these can be dangerous for children of all ages. The buyers were probably envisioning a nice, safe family community. That is not what ended up getting. If they have any chance to leave they will jump on it. With the declining market values some of the homeowners will end up being underwater. As time goes by they must decide if the best thing for their family is to just leave.

... 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."

No builder is going to buy the property until all of the litigation is complete, which could take years. In addition all of the tax issues for the development will have to also be addressed. This will also delay any development and cause further erosion to housing prices.

Hopefully we do not see too many stories of things like this happening around here.