Builder Lennar Bulldozes Unfinished Homes For New Community

Date : 07/01/2011 @ 11:58AM
Source : Dow Jones News
Stock : Lennar Corp. Class A (LEN)
Quote : 51.63  -0.82 (-1.56%) @ 4:01PM

Builder Lennar Bulldozes Unfinished Homes For New Community

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As builders struggle to compete with bargain-priced inventory, particularly foreclosures, they've downsized and simplified new homes.

They are also tearing them down.

Builder Lennar Corp. (LEN) recently demolished eight partially built California homes to make way for new construction. In Visalia's Eagle Glen subdivision, Lennar plans 70 single-story homes starting at $197,500 and priced as high as $250,000.

To be sure, this was not the same as Lennar demolishing homes it had built. Eagle Glen was originally developed by Ennis Homes and Ennis Land Development, but those companies filed for Chapter 11 bankruptcy in 2009, the Fresno Bee reports. The company planned to keep the development as it emerged from bankruptcy--which some builders have managed to do--but Ennis' website says the company is closed.

Ennis couldn't be reached. The lots were purchased this year for an undisclosed price, said Charles Schein, a spokesman for Lennar's Central Valley division.

Schein said Lennar looked into completing the homes, but they were exposed to the elements for too long and couldn't be salvaged. Miami-based Lennar recycled some of the materials and donated what could reused to Habitat for Humanity, which builds affordable homes for the working class.

The demolition reflects consumers' changing tastes. Some of the razed homes were two stories with multiple gables and defined entryways, designs that commanded hundreds of thousands of dollars during the housing market's heyday. They were as big as 3,000 square feet, while Lennar says the average home size at Eagle Glen will be 1,800 square feet.

"We've adjusted our offerings to fit the needs of the people today," said Schein, a spokesman for Lennar's Central Valley division.

Visalia is north of Bakersfield, Calif., one of the areas hardest hit by the housing crash. Overbuilding led to price declines, fueling the foreclosure crisis. Desperate builders realize they have to change to survive.

While bulldozing vacant houses for urban renewal isn't rare, tearing down new construction remains rare--though plenty of unfinished homes remain in boom-to-bust markets. In 2009, Guaranty Bank of Austin wrecked 16 new and partially built homes in Victorville, Calif., acquired through foreclosure, while KB Home (KBH) razed three model homes in Marana, Ariz.

-By Dawn Wotapka, Dow Jones Newswires; 212-416-2193; dawn.wotapka@dowjones.com

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