Builder Bankruptcy Sale - A Sign of the Times?

Recently I've been thinking a lot about foreclosures and bankruptcy in the changing Phoenix Real Estate Market. This takes things to a whole new level. 

Turner Dunn Homes, Inc., not exactly a household name here in the West Valley of Phoenix. Turner Dunn is a builder in Casa Grande, AZ. Maybe I should say was a builder. A bankruptcy auction will be held December 14, 2006 of Turner Dunn Homes. This is not just an auction of their offices and equipment, this is an auction of FIVE subdivisions encompassing hundreds of home sites and homes.

A few months back I recall seeing some brief blurb about a homebuilder in Casa Grande leaving some buyer's high and dry. Honestly, I didn't spend a lot of time on it because I assumed it was a custom builder with 2 or 3 homes under construction. Also, and this is not a great reason, I don't often work Casa Grande and refer clients to a local agent for information in that area. So I didn't pay enough attention to this one. It certainly has grabbed my attention now.

Apparently the sales office closed June 16. From what I can find out, a few of the homes are actually occupied by home owners. There are homes in all stages of progress from raw lots to completed models. Oddly enough Turner Dunn Homes was the victim of an arsonist back in June 2005 causing over $1 million in damage to homes under construction. Turner Dunn filed Chapter 11 in August of this year.

In the wake of this are the home buyers who have been waiting months and months for a new home to be built after paying thousands in earnest money only to find themselves still without their promised new home and facing hurdles to recover their deposit funds. Contractors have also been left unpaid for the work completed on these properties.

How did this happen?