November 11, 2006

Shoddy Construction And The Housing Bubble

Readers suggested a topic surrounding construction problems arising from a housing bubble. “I think in the coming months and years we will see more stories like this. It was only a matter of time before builder cost-cutting began to cause problems for buyers.”

One said, “In the early 1990s in San Diego, construction defect litigation was a real cash cow. Looking for that to fire up again, partly legitimate, and partly as a ploy for FBs to try to get out of their obligations.”

Another, “I bought new from Fulton Homes in 95 in Gilbert. A class action was filed a few years ago for improper slab prep (not post-tensioned) & poor grading on expansive soil. Luckily I only had minor damage, like settling cracks. Some people had huge problems. It took over 2 years to play out. $5 mil judgement. The lawyers took a third. Yeah, there’s some money in it if you target the big HBs. Given all the recent building, they should be quite busy for the next few years.”

One reader added, “My work in the construction defects business sent my kids to college.”

One from California. “Back in the mid-80’s, I lived North San Diego County. There had been a mini-boom in the late 70’s which, like all booms usually busts at some point. One weekend I drove around the Oceanside area and came across a whole street of SFH’s which were empty and the street was overgrown with weeds. I ignored the ‘danger’ signs and ventured into one of the houses and saw huge (6″ in places) cracks in the floor of the kitchen caused by subsidence.”

“Someone who’s father was a small builder told me that when there’s a boom, it’s hard to find various things like good building material (wood especially) because, for instance, the wood is being cut so fast and seasoned in kilns so badly, that’s it just a matter of time before problems show up in ‘rushed’ construction.”

“In these boom (and eventual bust) times, EVERYONE is grabbing for the money as fast as they can. The list includes (starting with the main offenders), real estate brokers and their sales people, mortgage brokers, speculators, building material suppliers, inspectors of all kinds, termite companies doing as many jobs as they can, because the realtors and owners and buyers want a termite inspection certificate quickly to satisfy mortgage requirements.”

“Most of the builders employ sub-contractors to do the plumbing, air conditioning, roofing, etc. In boom times, they too rush to complete the job in order to get onto the next job to keep the money pouring in but, for the new home owner, many of these bad construction don’t appear for several years until the shoddy plumbing and roofing starts leaking and the termites find some tasty timber which wasn’t treated correctly.”

“The end result is, there are going to be a lot of very busy lawyers in the next 10 + years but a lot of people are going to be unlucky because (like the building company Kara) many of these builders will be out of business or will have found protection in bankruptcy.”

One added, “Bottom line … pre-bubble the argument to ‘invest’ was: Even if rent doesnt cover mortgage + other expenses, profits will come from ‘appreciation.’”

“Sooo post-bubble the logical approach shall be: Even if rent is above mortgage + other expenses, better dont buy because of the ‘depreciation’ factor!”

The Wall Street Journal. “With once-hot condominium markets across the country in sharp decline and many real-estate professionals predicting a further weakening, some developers are facing more than a glut of unsold inventory. Angry condo buyers from Boca Raton, Fla., to San Diego are taking them to court, alleging everything from breach of contract to fraud.”

“In Florida, 2,557 individual complaints against developers were filed in fiscal year 2006, ended June 30, up from 1,825 two years ago, according to the state’s Department of Business and Professional Regulation.”

“In Colorado, at least 18 lawsuits have been filed by attorneys representing condominium-owners’ associations in the last two years. Most involve complaints of shoddy construction or faulty repairs in recently completed developments.”

“In California, developer Crescent Heights is being sued by condo owners in three of its projects, including the Metropolitan, a recently completed 342-unit development in San Francisco’s Rincon Hill district. Ben Bedi, who filed the suit, says he put down a 5 percent deposit on a $1.7 million condo during preconstruction in 2004.”

“In his complaint, the 41-year-old attorney alleges that when he moved in at the end of 2004, he found defects such as screen doors installed backwards and water pipes that leaked. The complaint also alleges that the developer misrepresented the size of the apartment. ‘I paid a lot of money for what I thought would be a brand-new home,’ Mr. Bedi says. Instead, he says, he has spent thousands of dollars just on repairs and other labor.”

“Real-estate professionals attribute this latest wave of legal actions to the surge in preconstruction purchases during the recent market surge. ‘You’ve got buyers out there who paid one and two million dollars or more for a condominium and are now dealing with everyday construction defects,’ says Ross Feinberg, a California attorney who specializes in construction litigation.”

“‘Right now, the condo market is a disaster,’ says Lewis Goodkin, a Miami economist and real-estate analyst. The crash in some areas was inevitable, he adds. ‘These markets were essentially propped up by speculators.’ Indeed, investors accounted for as much as 80 percent of the preconstruction purchases of luxury condos in Miami.”

“Dried-up demand and rising construction costs have forced many developers to stall or cancel projects, particularly in formerly hot markets that are now overbuilt. In Las Vegas, an estimated 6,900 condo units have been suspended in the sales process, while another 1,900 have been canceled officially.”

“As the number of scrapped projects increases, so too do the complaints. In Florida, many condo suits involve severely delayed, cancelled or recently completed projects in the southern part of the state.”

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Comment by txchick57
2006-11-11 11:59:43

Oh, I totally look for FBs to try litigation as a way out of stupid purchasing decisions. It’s the American way. I don’t know if it will work - would bet that it won’t. But so many of these lower end houses and even a lot of the higher end ones are just slapped together junk.

Comment by Bubble follower
2006-11-11 12:53:35

People always say the best houses made in the history of this country were made during the depression. They were built as slowly as possible because once the laborer was done in many cases they were out of work. So I guess this all makes sense - the more time you take to do something the better the quality is.

Comment by pismobear
2006-11-11 14:58:19

That statement is total BS. The reason was because there was little work, and the workers ‘did their best’ so they would be hired for the next job the builder had.

Comment by GetStucco
2006-11-11 18:20:16

Not total BS. It sounds like there is a better chance of finding good quality construction in a home built during a period of economic weakness, for whichever reason. Conversely, shoddy construction is a natural consequence of a mania, when an excess supply of buyers with a bucket of money and a box of stupid obviates quality concerns.

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Comment by edgewaterjohn
2006-11-13 09:33:47

The bear’s closer to the mark. My grandfather was a carpenter during the depression. After lugging his toolbox onto several streetcars just to get to the jobsite - he knew there’d be a crowd lined up waiting for the nod from the site manager. If his previous day’s work wasn’t up to snuff - the builder simply called on another - and it was a long mid-morning streetcar ride back home.

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Comment by Thomas
2006-11-11 14:49:03

Construction defect litigation absolutely will work, assuming you can get enough people to join with you. The standard procedure in multi-home (i.e. development) CD litigation is to sue everybody, from the developer on down through each subcontractor. What inevitably happens is that you get a settlement in which each party chips in, regardless of whether a particular subcontractor did anything defective — it’s cheaper to chip in $10,000 to a global settlement than pay $30,000 minimum to go to trial.

I hate CD work. Absolutely mindless.

Comment by GetStucco
2006-11-11 18:22:57

“Construction defect litigation absolutely will work, assuming you can get enough people to join with you.”

Even if the company is BK? If not, then this is another reason to suspect the last stage of the new homebuilder business model is to walk away from all obligations. Didn’t Kara basically already do this? Who wants to buy a new home when your downpayment may go “poof” when the company goes belly up?

Comment by Arwen U.
2006-11-11 15:46:38

My first rental as an adult was last year - a newly-built K. Hovnanian house with an unfinished basement. Which was a good thing, because the first time it rained everything on the floor was floating. It was quite the disaster. I don’t think it can be fixed, and btw the house is still a rental — 5 months vacant. (Asking rent too much - landlord bought ‘05).

Comment by GetStucco
2006-11-11 18:24:47


Sorry to hear you had to endure your own small-scale version of Katrina, but just imagine how much worse it would have been if you had been the owner?

Comment by skip
2006-11-11 17:41:48

I think you guys are a little behind the times if you think that you can successfully sue a home builder. There have been several improvements in the laws around the country. In Texas homebuilders make the FB sign a contract and a deed that precludes the homeowner and all subsequent homeowners from suing the builder. Any disputes must go to an arbitration. Coincidently, the home builders get to pick the arbitrators.

My favorite case are the home owners who bought a site developed by KB Homes in Arlington, TX. KB Homes purchased the land from the Feds very cheaply because it used to be a bombing range and had never been cleaned up.

Guess what they forgot to disclose to the home buyers? Opps!

Comment by Mole Man
2006-11-11 18:36:32

This varies hugely by state. In California there were such problems with crappy condos that laws got put in place making developers explicitly liable for many years after construction. The big difference is that this time around the builders are going bankrupt before they can be brought to court.

Comment by Chip
2006-11-11 18:57:45

Skip — you call those “improvements?” What side of the street you walkin’, bro?

Comment by Marc Authier
2006-11-12 10:00:01

Shppdy lending, shoddy buying, shoddy investing, shoddy speculation comes before. Thank you Easy Al, you and your criminals from the banking cartel. Good work!

Comment by oxide
2006-11-11 12:04:14

Somebody at DailyKos posted this a few weeks ago. I saved it because I thought it was interesting (no it’s not political):

[he talks abou5 badly insulated walls]
I have noticed, if anything, a huge bump in demand for my services. Of course, I am a special case as I work almost exclusively on “new” homes which have, usually, sprung a leak. I fix water problems, mold problems, rot problems, vapor issues and problems with poorly installed materials, especially isulation. As I said, these are usually new homes that have had several repair attempts by the builder. What they are building today is a joke. Tyvek?? You know that stuff? Every house you’ve seen with Tyvek will need work. The stuff is dangerous. Anyway, eventually, when people get tired of paying for work improperly and shoddily done, they call me. I tell them over the phone that I charge $100 an hour each and there are two of us. I give them a free consultation, but resolutely refuse to give an “estimate” as I have no idea what it will look like when I have torn into stuff. I add 15% on top of my price for materials as well, all of which I buy, and charge people for that time. In 6 years of doing this, I have not had one person call back to complain, only to offer more work or recommend a client. I’m kinda picky about who I work for.
Oh, and my phone rings off the hook. I could keep 20 guys busy, but I insist on making sure the work is done right.

[somebody asks him about shimmed floors]
I laughed so hard, I woke up my son!! Yeah, see the single biggest issue for most people in homes is squeaky floors. I don’t even touch them as it is realtivley easy to fix, but it disfigures the floor and pisses peopple off. Royally!
Anyway, a squeaky floor is caused by the subfloor rubbing on a nail as it rises and falls, ever so slightly, under pressure of a person walking on it. A shimmed sub-floor is especially prone to this as it means the joists are out of line and so shimmed to accomodate that. This often creates a bow in the plywood subfloor, guaranteeing a squeaky floor.
Lately, I have seen chip board (oriented strand board or OSB in lumberyard parlance) used even on the roof. THis stuff is fine in a completely dry application, but if there is even the slightest bit of moisture buildup, (and why wouldn’t there be when the outside temp is 10 below and 5% humidity and the inside temp is 72 with 70% humidity. That temp gradiet is just too steep to absorb cleanly over the 6-8 inches of a wall or roof) OSB will dissolve in less than a winter. So many McMansions are in real trouble. Earlier in the thread, people talked about how folks can afford these things if prices go down. HOw will people be able to afford the repair bills? I’m telling you, look out for large numbers of people just walking away from these things when the bills get out of hand and leaving them to the banks.

Hope the ugy didn’t mind I copied it.

Comment by oxide
2006-11-11 12:19:32

And btw, a big new set of condos(?) is being built next one of the subway stations in the DC city limits. I can see that they are made of OSB from the train ~300 feet away. I don’t know the first thing about construction, but it the framing went up pretty fast — didn’t seem right to me. Then they put OSB over the frame, and it got rained on, heavily, before they got the Tyvek on it. It’s been at the Tyvek stage for a few weeks.

Comment by Dan
2006-11-11 12:35:50

Here’s another tidbit to be concerned about if you have a house with “fake stucco”.

As far as issues not showing up for several years, a small percent would fall under that category as you can inspect, question, document, and evaluate the vast majority of materials and systems in houses today. I take my toolbag and a checklist to do a prelim on any house under consideration. If *I* can detect problems, there’s no need to listen to any of the crap the realtor is peddling. Any home buyer who doesn’t TRULY inspect the house themselves as well as shadow a professional inspector is asking for trouble. People spend more time, effort, and education buying a head of lettuce than they do buying the most expensive item in their lives.

Comment by Sammy Schadenfreude
2006-11-11 12:37:18

Excellent post, Oxide. Can you or other readers recommend sites that deal with construction issues? This would be extremely helpful for those of us contemplating a home purchase in the 2007-2009 timeframe.


Comment by Backstage
2006-11-11 13:21:42

1. Pay extra for a complete inspection, and then pay more for additional inspections by specialists.

2. Offer contingent on fixing all problems.

3. Make the buyer pay for a premium warranty.

4. Be prepared to walk if it isn’ perfect

#4 is the key to getting good deals in any case. Emotions will sink you. Emotions are very expensive.

Comment by Jim in San Marcos
2006-11-11 12:50:13

I think that Paul Bunyan would be better reading material than that quoted article. I don’t believe a word of it.

Comment by palmetto
2006-11-11 13:40:45

Great post, oxide. This is not just happening with developers and mass market builders, but individual investors who bought homes to fix up and sell. I’m watching work being done at the house across the street from me. First of all, the guy who bought it for $179,000.00 told me he now has about $195,000 into it (BTW, you could have purchased this house for $90,000.00 or less pre-2000. And that’s where the price will fall back to and further). Houses aren’t selling in this ‘hood for $179,000 anymore, so he’s already screwed. But he’s full speed ahead on remodelling with an undocumented (AHEM) crew and they just put on a nice (AHEM) OSB (particle board) front porch facade. It’s been sitting bare like that now for a few days. It’ll get a nice stuccoing and the poor schmoe who buys it (should there be one, which I doubt will happen any time soon) will wonder what happened when it falls apart like wet cardboard. So, caution is in order for anyone who buys a home that was remodeled during this bubble. Because they might find out they’ve been “stuccoed”.

Comment by dba
2006-11-11 12:17:28

I predict a lot of problems with resales in states that allow buyers and sellers to waive home inspections. I remember in 2004 i read stories of how sellers in NOVA were requiring buyers to waive the inspection as part of buying.

New homes, check out JD Power and their ratings. Toll Brothers is near the bottom in almost all regions. I’ve also read of a lot of complaints about them on the internet. Leaks being a biggie. They say luxury, but they use regular supplies from Masco like everyone else.

Comment by Sammy Schadenfreude
2006-11-11 12:39:13

Any buyer stupid enough to waive their right to a home inspection gets no sympathy from me when they find problems later on.

Comment by txchicK57
2006-11-11 14:42:49

Waive it! It’s going to be my best negotiating tool!

Comment by Backstage
2006-11-11 20:17:18

You betcha, TX. I’m going to get my next house a proctology exam, and make the seller pay for all the expenses to make it like new.

I don’t want them to do the work, just sell it to me for less. Lower taxes, better LTV, I get to ensure the work product.

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Comment by peter m
2006-11-11 16:55:28

Didn’t know JD powers rated HB’s. I used them in picking out my used tacoma excab pickup. They rated the 2002 yr model as the one with the fewest mechanical problems, and they were absolutely correct.

Comment by Chip
2006-11-11 19:09:23

I am, perhaps, odd man out here, but I do not think it is government’s business to “allow” or “disallow” inspections, but rather a duty to disclose risks and maybe encourage inspections. I’m not willing to die in shared poverty because some dumb-ass who should’ve known better (a) thought they could/should purchase a property and (b) didn’t understand the caveats associated therewith.

Comment by Jay
2006-11-11 12:20:45

Many home builders create a separate corporation for each development, and when that project is complete, they dissolve the corporation. Then there is nobody to go after down the road when the houses start falling apart, and the shoddy materials and workmanship show up.

Comment by Ben Jones
2006-11-11 13:52:23

And don’t forget the state to state bankruptcy dance these guys do.

Comment by kosiuko
2006-11-11 15:28:06

And they do know what is behind walls, so dont expect to find them any place nearby…

Comment by tom stone
2006-11-11 12:20:57

I understand that in many areas with a lot of building,the counties allowed the builders to hire their own inspectors because the counties just did not have the bodies.i ahve seen hundreds of units in sonoma built with osb roofs and tyvek siding where tese materials were exposed to the rain during construction.when you can drive by on the highway and say “my god ,how are they getting away with that?”from a quarter mile away,at 55 mph,it says something.

Comment by Chip
2006-11-11 19:12:47

“…the counties allowed the builders to hire their own inspectors because the counties just did not have the bodies.”

Tom - if that is true, it’s totally repulsive. Wish we had 1880s’ justice, to remedy it.

Comment by palmetto
2006-11-11 20:26:11

Exactly, Chip. It is very frustrating to have one’s hands tied by the law. Tarring and feathering should come back into fashion.

Comment by rms
2006-11-11 12:38:09

Today’s spec neighborhoods have roughly 10-years before they start showing signs of serious deterioration. I look at things like thin asphalt roofing with the corners turning up, low quality latex paint peeling, twisted lumber that wasn’t dry before milling, and my favorite…spalling concrete on driveways and walkways. The folks with good jobs move on to the next new neighborhood while those barely making it to the end of the month are stuck, and they don’t have enough for upkeep either. This trend is really accelerated with you start to see the garages being converted into extra rooms.

Comment by mr. bungalowball
2006-11-11 12:40:58

Due to the high prevalence of shoddy construction during this boom, homes that were built in 2002-2006 will eventually have a stigma associated with them, and that stigma is likely to last many decades into the future.

Comment by albrt
2006-11-11 21:33:58

Not if the homes themselves don’t last many decades into the future.

Comment by Ben Jones
2006-11-11 12:46:56

When I went to take the pictures of the new development in Flagstaff, one thing that jumped out at me was the large windows. There were too many for one and they were too large, efficiency wise. But the real shock was that the windows were just single pane. Keep in mind that in Flagstaff it’s best to carry a jacket in the middle of summer and it gets very cold in the winter, due to the altitude. I thought at the time, that if this is what you can see from the outside, imagine what you can’t see behind the walls!

Comment by Mr. Fester
2006-11-11 13:57:01


I am floored that anyone would use single pane in Flagstaff, with the cold nights there.

Large glazing on and very high ceilings are very hard to keep comfortable. I had a lovely bay window in my office that created a bone numbing draft. That does sound very cheap, considering they were trying to lure the the big $$$ locust into Flag.

Comment by Ben Jones
2006-11-11 14:21:55

I forgot to mention the most incredible part. These houses start in the $500,000’s and go up to $800,000!

Comment by Housing Wizard
2006-11-11 15:09:37

I am convinced that my double -paned windows keep my winter utility bills at $39 to $69 per month .
Someone was telling me that the poor people in cold country put sleeping bags on the windows in the winter if they don’t have double pane windows .

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Comment by JTZ
2006-11-11 15:56:47

There are cloth window shades that are designed to be insulated window comfortors. Ive seen them used in MT homes.

Comment by Chip
2006-11-11 19:15:48

Wiz — whoa — do you have one of those 177 sq.ft. houses? :)

Comment by Housing Wizard
2006-11-11 22:24:53

No Chip ,2000 sq feet . I don’t actually know why my heating and cooling bills are so low ,but I turn out lights when I’m not using them , I don’t over do it on heating and cooling . But this house stays comfortable most of the time . Maybe its the design of the house ,but I didn’t expect the bill to be this low .

Comment by Davey Jones
2006-11-12 00:41:44

I’m not at all surprised. Our house is over 3500+ sqft with double-paned windows everywhere. The library has a special 25 ft back wall (connecting to a brick porch) almost entirely glass, each pannel of the glass wood-framed and double-paned, NO sliding glass doors. And the den has the same kind of wall 15 ft wide that connects to a terrace.

Even here in Mobile our summer a/c bill was $179 in the hottest month (and we do have some HOT months). The next highest was $173. The rest of the year half (and sometimes much less than half) that.

Comment by mr. bungalowball
2006-11-11 13:57:56

At least it didn’t have a gaping hole where the window should be:

“When you are buying a newly-constructed home you…get to do a punchlist visit. It’s called a “punchlist” because after you’ve completed it, you will want to punch the contractor who built your home.

Comment by cactus
2006-11-12 06:24:48

My rental in Phoenix has too many windows although they are dual paned windows. Problem is the window frames are aluminum. If its 120F outside the window frames are 120F on the inside as well. built in 1996.

Comment by dba
2006-11-11 13:30:12

after the Kara Homes debacle and what I read of Toll Brothers I will never buy a new home. If I want something recent it’s going to be a 3-5 year old home where I can get a complete inspection done and any construction problems will be visible.

Comment by Misstrial
2006-11-11 13:35:21

Not sure about the rest of the country, but in CA, most construction workers are/were Mexican/Central American day laborers picked up randomly at day labor sites around OC, LA, and other counties.

These inexperienced but cheap laborers undercut the wages of American construction workers. I remember when Orange Coast College (”OCC”) in Costa Mesa had expansive construction learning sites (80s-early 90s) off Adams Ave so that young people could learn construction trades like roofing, structural construction, cement paving (foundation pads) and drywalling. But nooooo, our wonderful governmint chose to allow floods of illegals (1/2 generation out of the adobe hovel) to “come on in :)” and build “homes.”

In the development where we moved from in CA, I witnessed green carders and illegals building homes in our development. 2/3 of the homeowners wound up with severely leaking roofs and 1 year later filed a complaint with the State Contractor’s Board as well as a class action against the builder (who himself was selling a defective-roofed home, albeit this defect and damage was NOT disclosed to the buyers).

Builders made A LOT of profit using cheap labor. I do not feel sorry for them at all.


Comment by palmetto
2006-11-11 13:44:54

Misstrial, same here in Fla. It’s actually a huge problem and one that will haunt the US in more ways than one in the years to come.

Comment by spike66
2006-11-11 17:35:12

Had a discussion with a coworker buying in Ct. When I told him to beware contractors using illegals, he blew me off. When I pointed out that he was paying top dollar for unskilled labor, he countered that American union work would double his house price. When I said that a contractor who’d skirt the law and hire unskilled illegals would probably cut corners in other ways, he brushed off my concern. I have no sympathy for any buyer whose house collapses around him. With all the construction and renovation projects using illegal labor in plain sight,a lot of buyers had to figure they were getting a “bargain”. If their houses are defective, they can’t claim they paid for skilled or knowledgeable labor.

Comment by palmetto
2006-11-11 18:46:36

Good point, spike. In the long run, the so-called “cheap” illegal labor is going to cost far more than anyone ever imagined, not only in terms of costs of defects, but also costs to the community in terms of health care, special language needs, education and law enforcement at taxpayer expense. Not to mention the potential of bodily injury to future homebuyers, including children. I, too, have no sympathy for anyone who thinks illegal labor is OK. Cheap is not always better and it can be dangerous.

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Comment by brandon
2006-11-11 13:50:12

Some good stories and information at this site:

The website is called “Homeowners against deficient dwellings.”

Comment by JimAtLaw
2006-11-11 13:58:29

I have a buddy here in Los Angeles who bought one at one of the condo projects in downtown L.A. He’s now trying to get out, and among other things, has found that the place is actually 150 sqaure feet smaller than represented by the builder. I wonder how prevalent this is.

Another observation from downtown L.A. — there’s a combination commercial space/condo project currently under construction where they’re building a Ralph’s (grocery store) downtown, and downtown L.A. has been waiting for a grocery store for years. You would figure that demand to live right next to the shopping center would be significant if it was going to be significant anywhere downtown, and I am personally interested in living there if the price is right. Well, I’ve been going by every month or so to try to get pricing for months now (it’s been under construction for quite some time), and last I’d heard, prices were supposed to be released in October, but now they’ve put off pricing the units by at least three more months. It would seem the builder is holding off pricing so as to avoid having to cut prices later in a falling market, and when I made this comment to a salesperson there this morning, she didn’t try to offer any other explanation - is this a widespread trend for construction projects that were already well underway when the bubble started leaking?

Comment by bubbleboi
2006-11-11 15:33:03

JimAtLaw - i’m always amazed at how much brokers misrepresent the sizes of houses/units that they are trying to sell. To me (i’m no laywer), this seems like outright fraud and should be prosecuted as such. If they don’t know the square footage - they shouldn’t pretend that they do - ignorance is no excuse to include a misleading estimate. There was a lawsuit filed in San Francisco in August, 2006 at a development known as “The Beacon” for this very reason. I will be watching closely.

In addition to poor construction quality, another trend i’ve noticed in new construction is very small living/dining rooms. In my market (Chicago), most houses/condominiums don’t even have separate family rooms, so all of your living is done in the living/dining room. In many instances, these rooms are so small that there is barely room to put normal-sized furniture. However, the master bathrooms have double-sinks, large separate showers, Jaccuzzi bathtubs, etc.

they are building poor quality houses with “bad bones”, layouts that will be very undesirable in just a few years.

Comment by REWatch
2006-11-11 17:11:47

There are two problems with using alleged misrepresentation of square footage as a cause of action or a defense to avoid a purchase contract.

First, there is no standard method for calculating the area of a housing unit. For instance, most builders measure through walls, cabinets, and other fixtures, while most laymen would believe that only actual floorspace should be used.

Next, the misrepresentation must be material to the purchase agreement, and it probably is not in most cases. For instance, let’s say that buyer and seller agreed to a price, and seller states “by the way, the advertised size is 2000 sq ft, but it may actually be up to 150 sq ft less, depending on how you measure. Do you still want to go through with the purchase?” I can practically guarantee that at the height of housing fever, when potential buyers were yelling and clawing at other potential buyers every time a home came on the market, the answer would have been, “No!”

My guess is that FB’s are using this size misrepresentation solely as a way to get out of crappy purchases. If housing values were still booming, there would be no complaints.

Comment by Paul in Jax
2006-11-11 19:13:28

It’s up to the buyer to get it right - but there almost certainly has been square footage inflation in the last five years or so - I’ve seen it in my limited dealings. 100 sq ft high is common - I would estimate the average house listed is around 5% overstated.

And that’s a buyer’s best bargaining tool. 30 minutes with a tape measure and clipboard. If you could just use your measurements to negotiate down 50% of the pro-rated overstated square footage, that would be (using the 5%) $10,000 on a $400,000 house, or about $20K/hour!

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Comment by albrt
2006-11-11 21:51:29

Condo projects can be especially tricksy as to how they calculate the square footage. Buried somewhere in the plans is a definition that says they are measuring from the outside of the walls, the inside of the walls, the middle of the walls, or maybe something even less obvious.

Comment by Muggy
2006-11-11 14:03:19

There is a condo bldg. being built in Madeira Beach, Florida that has faux-tile roof. I watched the workers walk around carrying sheets that were flimsy like plastic.

I wonder if the FB’s that bought “pre-construction” were expecting real tiles.

I will NEVER buy anything unless it is in front of me. Lessons learned, lessons learned…

Comment by brandon
2006-11-11 14:09:24

From Consumer Reports: “Housewrecked
Serious hidden defects plague many newer homes. Here’s how to avoid trouble.”


“Last year, consumers bought more than 1 million new homes in the U.S., a near record. Average sale price: $250,000. But a CR investigation has found that increasingly, buyers are discovering that their new dream home has serious defects and that they have more consumer protections for a fickle $20 toaster than for a flawed investment-of-a-lifetime.”

“Our investigation, which included dozens of interviews with homeowners, builders, inspectors, industry representatives, government officials, and lawyers, found those defects and more in many new or young homes. Faulty foundations, serious moisture intrusion, and shoddy framing are often at the root of problems, which manifest themselves as gaping cracks, rotting walls, and windows and doors that don’t close right. Often, though, they show up months or even years after the buyer has moved in and the builder has moved on.”

Comment by Housing Wizard
2006-11-11 15:19:45

I watched them build my last house . Every once in a while I had to pound a nail in that they missed . My neighbor would go out to the site on the weekends and pound in more nails . As it turned out both these houses took the earthquake in Ca. really well .

Comment by GetStucco
2006-11-11 15:25:51

Shoddy construction: Yet another reason why now is not the time to buy! When the dust settles on the bubble, and there is still a huge overhang of homes for sale with few qualified buyers, anyone with dry powder will be able to pick through the bubble rubble and carefully figure out where the shoddy construction lies and where the quality lies.

Comment by B'hamster
2006-11-11 15:48:18

This thread is excellent. I hear a lot of the problems up here in the Pac NW with spec homes built by national companies that have no concept of the vulnerability of the water intrusion and henceforth the significant problems 2-5 years after completion. Do don’t need to ask too much to get a horror story from someone in a newer home.

This was the exact reason we opted for an older home when we bought in the past year (ahem, probably near the market top). I figure if the tried and true design lasted almost eighty years, it’ll last another forty or so. Something to be said for old-growth cedar siding.

I am amazed at some of my friends’ McMansions and the crappy materials I see in them – from wood to crappy workmanship in the visible areas (eg, garage, laundry rooms). I can only imagine what it looks like in the areas I cannot see.

On a side note: I did read somewhere where homes today were only built to last thirty years or so, anyway. As people’s tastes will change and they can be torn down and rebuilt in a few decades to meet changing tastes. Sounds like a cop-out for disposable housing to me.

Comment by GetStucco
2006-11-11 18:13:41

“I am amazed at some of my friends’ McMansions and the crappy materials I see in them – from wood to crappy workmanship in the visible areas (eg, garage, laundry rooms). I can only imagine what it looks like in the areas I cannot see.”

Just think how they will feel in a couple of years when they have to
to scrape up some moolah to cover repair costs for shoddy construction defects about the same time they start to clearly perceive their crushing debt burden.

Comment by Davey Jones
2006-11-12 01:01:33

Thirty years. Now that is sad. Our house is 28 years old and is in perfect shape. The developer of this sub-division liked the houses so much he bought the one across the street from us. And still lives there.

Comment by edgewaterjohn
2006-11-13 09:42:17

30 years? How does that work with a 50 year mortgage? Kind of like buying a car isn’t it? The payments often outlive the vehicle.

Comment by Housing Wizard
2006-11-11 17:30:10

That is really sick to only build a home to last for 30 years . Homes are something you should be able to pass down to your offspring .
If they are writing 50 year fixed rate notes how do they expect the loan to survive the house . We have a problem in this Country with
people not caring about anything but living for today .

Comment by GetStucco
2006-11-11 18:30:37

We need to have the Japanese take over our homebuilding business, the way they took over our auto industry. Because this shoddy construction by illegal immigrant laborers (for dirt cheap, no benefit wages) is clearly a part of the homebuilders’ new business model which let them make out like bandits. Like the Big Three automakers in the 1970s, they only were able to get away with this because they have an oligopsonists’ lock on the market. More competition would go a long way towards fixing the shoddy construction problem.

Comment by yogurt
2006-11-11 23:10:19

Disagree. The problem is the idiot buyers, not the builders. If buyers demand quality builders will provide it. If buyers don’t, more competition will just mean more builders selling crap houses for big profits.

Comment by spacepest
2006-11-11 17:33:41

Wow, all I can say is to shoddy homebuilders…thank you for keeping my husband in business–he’s a handyman/home repair/plumber.

The amount of stuff that is falling apart on new homes that are less than 5 years old is unbelievable. Poor construction, poor plumbing, and shitty insulation, and your average homebuyer/future homeowner just accepts it. Unbelievable! You think if you were going to make a major purchase on something that might take 30 years to pay off, you would at least inspect it better.

New home builders hate us. We always sneak onto their construction sites to see what is really going on. And at this point in time, I’m really leery of buying any newly constructed homes from any of the major home builders. Cheap, shoddy labor, materials, and inexperienced foreign workers make these things a rip off for any buyer.

If I ever buy a home again, it won’t probably won’t be from a major home builder…I’ll most likely buy either an older home or just go to small custom home builder if I must have new.

Oh yeah, real estate agents hate us too. Every listing they pull for us, we always demand to see the name of the original builder of the home. If it says something like “KB,” “Toll Bros.”, “Ryland”, we say, “no thank you.” (And IMHO, KB homes has to be the worst offender out of the list when it comes to shitty new home construction–poor quality, high price, bad designs and locations, and just ugly looking homes to boot).

Comment by palmetto
2006-11-11 20:23:20

LOL, spacepest. I did a something similar when I contacted a lady who was trying to lease/sell a Lennar home. I called a number off a sign posted on the road, since I was looking for something in that particular area, but not in the Lennar development. She started describing the home and I asked if it was a Lennar home. When she said yes, I reacted with horror and said “Oh, no, no, no, but thank you” and hung up. Probably upset her, but I want her to think long and hard about what she bought. And, you are right about KB, we’ve had a number of their gulag developments sprout up around here.

Comment by SouthFL Renter
2006-11-11 18:36:26

I just sold my SHF in rural upstate New York a couple of months ago (and I’m really missing it, seeing what there is to choose from here in Florida).

The home was built in 1891. The support beams were hand-hewn from a single tree. The ones in the “basement” were easily 2ftX3ftX30ft. The roof was also hand-hewn 1x. The oak flooring throughout the downstairs was foot-wide and room-length. I could go on-and-on.

But what I found to be so amazing was how solid it was. The basement had no sump-pump, and was never moist. There were no warps in the floors, no problems at all. 100+ years, and I’d bet it will last another century.

Comment by palmetto
2006-11-11 18:52:32

SouthFL, I don’t blame you for your dismay at the housing in South Florida. I don’t know where in South Florida you are, but when the time is right and the prices come down, there are older and more gracious homes in subdivisions that were built during the 1950s-1970s. Some are actually quite nice and compatible with the Florida environment.

Comment by cactus
2006-11-12 07:01:36

That old growth lumber lasts forever. the new stuff looks like smaller trees where one can easliy see the ring looking at the end of the beam. The ring being the tree rings showing years of growth. I think that wraps easliy compared to seeing a radius looking at the cut end impling a larger diameter tree.

Comment by DannyHSDad
2006-11-11 23:01:25

In Austin,TX the boom times for homes were during the dot com bubble and they were building like crazy until 2000/2001. And some were so bad, there were mold problems that came up and then lawsuits came hot and heavy and ended up changing TX insurance coverage and rates.

Anyway, we bought a new home in 2002 after the peak so we believed that the homes were better built as things slowed down (our builder decided to leave the subdivision so we got, what we thought, a very good deal). We lived in it for 3.5 years and didn’t experience any major problems. Our next door neighbor had their window still area fall apart (outside bricks), so things weren’t as good as we had expected! (Some of our friends who had homes built during the peak had more serious problems like chimney coming down or foundation cracks.)

My point is, don’t assume anything: buying during the lean times would likely get you a better home but that’s no guarantee. The ideal is to build it yourself. Even if you go with a builder, at least keep a close eye on the home building process if not every day, say, every week.

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