Foreclosure Spotlight [Download PDF]
On the way to tour one of his many battlefield neighborhoods, Crosswinds Communities president and sole shareholder Bernie Glieberman climbs into the cockpit of his black Mercedes SL and suction-cups a navigation system to the windshield.
It's the pocket system that has proven most reliable, he says, sometimes leading him to shorter routes he never would have thought to take, other times confirming his tried-and-true paths from here to there.
If only there were a plug-in device to help the 51-year industry veteran and others like him navigate the brutal home building market as easily.
"If you tried to name all the things that could go wrong, they all happened at the same time–and in Detroit, you add the auto industry to it," says the 68-year-old Glieberman. "This has got the most challenges of all the years I've been in the business. I have never had this many challenges at the same time."
Anemic sales, bloated inventories, and tightening lending standards are enough to make any seasoned industry veteran queasy. And on top of that unsettling mix are foreclosures–Michigan has the dubious distinction of ranking in the top 10 in terms of both foreclosure rates and foreclosure activity, according to RealtyTrac. As banks firesale the reclaimed inventory and builders drop asking prices to stay competitive, land is losing value faster than it takes to digest an antacid.
It's small comfort that Glieberman has plenty of company.
Foreclosures may be capped at 2 percent of households for now, but it hardly takes an alarmist to see that a 65 percent year-over-year rise in foreclosure activity nationwide can't be a good thing for the housing industry. Of particular concern is just how fast the numbers and rates have risen in new-home builder hot spots such as Arizona, California, Florida, and Nevada.
As foreclosures crop up in new-home communities, they are altering the physical landscapes and social fabric of neighborhoods. Shutters replace curtains, weeds supplant lawns, and neglect takes over development. Vacated homes also attract squatters and create opportunity for crime and vandalism. With these increased liabilities, builders like Glieberman face a monumental battle to preserve value in their communities–or face being so far underwater that they will lose money by building more homes in them.