When a home builder goes belly up

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Worthwhile reading in today’s New York Times: David Streitfeld’s account of what happens whan a home builder files for bankruptcy. In short, when builders fail, the most recent home buyers get screwed.

Streitfeld -- who joined the N.Y. Times recently after a run of excellent real estate reporting at the L.A. Times -- profiles the collapse of storied builder Levitt & Sons, and what happened to buyers at its Seasons at Prince Creek West development in South Carolina:

‘... About 90 buyers have paid a total of $3.48 million in deposits for houses in varying stages of completion, ranging from all but done ... to unadorned dirt. Another 90 houses are occupied, but many of these residents are, if anything, even more unhappy than the depositors. Levitt sold them on a community where everything would be taken care of. Those assurances mean little now.’

Not pretty. Why did Levitt fail? The company blames ‘an absolutely unprecedented and catastrophic downturn’ in the Florida real estate market.

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Photo credit: AP
Hat tip: Housing Chronicles