by Tim Sheerman Chase
The unprecedented decline of property values in the United States, which has lasted for four years now, led to many investigations and accusations of who is responsible for what. While the government, banks, and real estate professionals have been routinely targeted by media and the broad public, there has been hardly any legal action — until now.
A group of homeowners in the Inland Empire region of California sued eight construction companies for causing damage to their home value. The homebuilders allegedly marketed the homes aggressively to potential homebuyers who were not qualified for this real estate category. After an avalanche of foreclosures over the last few years, many houses remained unoccupied and stigmatized the neighbourhoods, which were once sold as calm and family-friendly.
While a federal judge at the court in Riverside originally dismissed the lawsuit, the 9th Circuit Court of Appeals based in San Francisco said that the homeowners had a right to pursue a fraud claim. All the homebuilders refuse any intention to inflate the regional property bubble.
Banks and mortgage agents trying to sell more mortgages, developers and realtors trying to sell more homes, speculating homebuyers going far beyond their means, and the government trying to create a fata morgana of prosperity in the US — all have their share of guilt. Now we may find out who is going to pay for it.