Builders Giving Up On The Sinking Market
In California, where developers have been racing to turn farmers' fields into subdivisions, they're now walking away, leaving houses partially built.
Those who have already moved in wondering what will hit next.
"I'm concerned that once the weather starts getting bad, there's tile piled on the roof that could just fly off," homeowner Marius Gieske told CBS News correspondent John Blackstone.
Dunmore Homes had building projects in a dozen California communities from Bakersfield to Yuba City. Now it's halted work everywhere, giving up on a fast-falling market.
"We couldn't sell a moving target," said John Slaughter, vice president of construction and operations for Dunsmoor Homes. "What we wanted to do is stop."
That moving target, collapsing house prices, has already cut $1.2 trillion from the value of American homes. And the losses are mounting, going to $4 trillion by one estimate, by the end of next year.
So developers are scrambling to get rid of houses they can't sell. Many are turning to auctions.
"You don't know where the bottom is, and so an auction will tell you if you hit the bottom and where it is," said Craig Barton of Anderson Homes.
But as Anderson Homes searches for the bottom, those who bought from the developer at the top feel betrayed.
Sherry and Percy Berquist, who paid $597,000 last year were shocked to see $335,000 set as the opening bid for an identical house to be auctioned. The developer may be able to absorb that loss. The Berquists can't.
"It's gonna be very tough," said Sherry Berquist.
Across the street Amy Sturdevant paid $585,000 for a house. But now the developer has set $295,000 as the opening bid for similar houses down the street.
"I feel like my parents' grave has been robbed. This was an inheritance. I sit out here and I look at this…" said Sturdevant.
Those like Sturdevant and the Berquists who bought at the peak may be the biggest victims of this housing bust said Financial Planner Patrick McGilvray.
"That's the real tragedy for the people who got in at the height of the market. They are going to tough it out," McGilvray said. "They are the ones who are going to carry the water so to speak for this debacle."
If part of the reason for falling prices is overbuilding, it may not be over yet. While construction has slowed builders are still putting up new homes at a rate of more than one million this year.
