Zombie Subdivisions – The Living Dead of the Real Estate Market
If you live in an area that experienced high growth in 2005 and 2006 odds are you have a zombie subdivision in your community. You know what I am talking about, roads, lights, maybe even sidewalks installed around fields of weeds and brush. Perhaps there are a couple of homes built, maybe even a face that looks out from the home nervously when the rare car drives by.
The Zombie Subdivision. The living dead of real estate.
The Wilmington Star out of North Carolina had an interesting article on the phenomenon. Wilmington and the surrounding area had a huge boom as people were leaving the northeast and moving to the ocean. Property values soared. Development was rampant. In Brunswick county, between Wilmington and Myrtle Beach, huge golf communities were planned and permitted. In 2005 and 2006. Ready to open just when the bottom fell out of the market.
These empty tracts, the shell is ready but there is no life, are the prime examples of zombie subdivisions.
It’s clear now to developers, bankers and real estate agencies that the planned development in Brunswick didn’t fit the market.
“What we saw from an appraisal and real estate point of view was that we really peaked about the third quarter of 2005,” said Tom Shoaf, a broker with Coldwell Banker Sea Coast Realty. “But by then, the permits had been pulled for a lot these projects and stuff was getting in the ground, so they were past the point of no return.”
In the end, these developments will probably get moving again – though maybe not for the next couple of years, officials say.
“I foresee a slow, steady growth,” Brunswick County Assistant Attorney Jana Berg said.
But the homes will likely be cheaper, smaller and come with fewer perks. StarNewsOnline.com
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Comment by talani casariego on 27 May 2009:
I am a real estate appraiser and have been giving this problem some thought for the last year or so. I think that it would help if counties published the statistical data about how many houses are under construction (building permits) and how many Certificates of Occupancies’s have been issued so that appraisers, lenders and small developers have good pipeline data. This information is already gathered by most counties, it just isn’t published in any way. An ongoing list of # of new home permits pulled in the month, # of renovation job permits and # of demolition permits along with the # of CO’s issued in that month would make a huge difference in teh quality of appraisal the banks and developers are getting.
Pingback by Quick scan of the net - coldwell banker real estate — Gown Town Evasion on 27 May 2009:
[...] http://www.therealestatebloggers.com/2009/05/27/zombie-subdivisions-the-living-dead-of-the-real-esta…“What we saw from an appraisal and real estate point of view was that we really peaked about the third quarter of 2005,” said Tom Shoaf, a broker with Coldwell Banker Sea Coast Realty. “But by then, the permits had been pulled for a lot … [...]
Comment by Jason Sandquist on 27 May 2009:
Banks haven’t had to plow down any sub-divisions around the Twin Cities… yet. We have are fair share of missed developments, but nothing to drastic.
Pingback by So much housing news - where to start?: Taylor Anderson, PE on 28 May 2009:
[...] from even last year. Generally, permits and starts are down for April 2009 about 50%. The number of “Zombie Subdivisions” is a major concern too – with lot inventory so high that even in the usually stable coastal markets [...]
Comment by Bill Rice on 28 May 2009:
This is a serious problem. I agree with Talani, this “shadow” housing inventory is going to have an unknown effect on long-term housing prices and recovery.
There is one across from my subdivision, here in Michigan. It only has a couple of homes into–it is a sad site for the economy and those couple of families. Can you imagine attempting to sell those two homes in a sea of 250 stake-only lots?
Comment by Canton real estate on 1 June 2009:
We have neighborhoods in north Atlanta where the slabs have been built and nothing else. They look like large cemetaries. I feel bad for the people who bought first in those neighborhoods. I could be over a decade until the subdivisions are built out.
Comment by The Ponds on 1 June 2009:
A consideration when building developments is the surrounding city and community. When new communities are struggling due to the economy, a positive direction is to bring the community together through events, festivals, art showings, and family activities. The Ponds community in Summerville, South Carolina is a great example of a community that strives to bring energy and life to the neighborhood, even when times are tough. Visit http://www.discovertheponds.com.