A group of homeowners in California have revived a lawsuit in the federal courts, alleging that the value of their homes has dropped as a result of negligent actions by eight homebuilding companies.
According to a report from Reuters, the homeowners, who live in California’s Inland Empire region, say that they purchased their newly-built homes during the height of the housing boom from 2004 to 2006. The lawsuit claims that the homes were misrepresented by some of California’s major building firms as being “stable, family neighborhoods”.
Homeowners allege that the building companies, which include Beazer Homes USA, Lennar Corp., Centex Homes and Shea Homes Inc., marketed the new developments to unqualified borrowers, who were nevertheless able to obtain financing at the time, something which led to a “frenzy” of buying activity which saw home prices in the area artificially inflated.
Once the housing bubble collapsed, short sales and foreclosures in the Inland Empire region went through the roof, something which led to an enormous number of uninhabited homes in the area, which has since become blighted with crime and unkempt yards.
The lawsuit had originally been dismissed by a federal judge at the court in Riverside, California, however the 9th Circuit Court of Appeals based in San Francisco chose to uphold the lawsuit’s claims last Wednesday, saying that the homeowners had every right to pursue a fraud claim against the building companies. According to the court, the allegations by the homeowners that the builder’s activities had inflated their neighborhood’s bubble were sufficient, and that the “decreased desirability and economic value of their homes” represent injuries that the homeowners should be able to claim for in a court.