Traverse City Record-Eagle

Real Estate News

August 13, 2012

Economy Responsible for New ‘Ghost Towns’

Syndicated —

Forget the tumbleweed, spooky cemeteries and abandoned saloons. America's 21st-century ghost towns have never even had a chance to host a ghost.

Some of these modern-day ghost towns include streets and streetlights but no houses. In others, there are unsold or foreclosed mega-mansions or sky-high condos that were never finished. There are foundations without walls, homes without windows or siding and cul-de-sacs that have been graded but never paved.

In many cases, these would-be housing developments are the victims of the real estate collapse that began in late 2006.

Recovery

Now that the economy is on the mend and the real estate market is beginning to correct itself, it's likely these places will bring up the rear of the recovery train. That, suggests John Gallo, a real estate analyst and finance lecturer at the University of Iowa, is because they're tainted by their association with the housing collapse and recession.

"It's going to take a long time to absorb those places into the market," Gallo said in a report issued by the University of Iowa News Services. "Nobody wants to buy houses in those developments or build new houses because so many of the properties have or will become rental properties, and you don't know who your neighbors will be."

David Rice, president of New Home Star Corp., a company that sells new residential construction in 14 markets, ranging from Seattle to Orlando, says lumping all these ghost developments into the same category would be wrong.

"How quickly they rebound will be directly linked to the reasons the development stalled in the first place," he said. "There's a big difference between a development that sits 90 minutes outside a metropolitan area whose pool of buyers dried up, and a very desirable, well-located piece of land being developed by someone who got in over his head financially.

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