CA Builder Defaults Exploding
First it was Kimball Hill that went BK. Then Renyen and Bardis principal declares personal bankruptcy. Now SunCal Cos. defauted on its $235 million dollar loan on its Bakersfield golf course community. ALL IN ONE WEEK.
The dominos are starting to fall. Orange County new homes sales through the first 22 days in April are down 56%. Foreclosures show no signs of slowing and inventory keeps growing.
As more and more builders fall under the protection of bankruptcy reorganization, they will have a competitive advantage against non bankrupt builders. A uneven playing field is developing for developers which will like force more builders and developers into bankruptcy to reorganize finances to be able to compete financially.
As we approach the end of the month, a lot of obligations are due. Expect to hear about a lot more problems in CA that can't be fixed without reorganizing.