updated 4/14/2008 6:47:34 PM ET 2008-04-14T22:47:34

At the new community of Seapine Estates, street names like Sea Foam Drive and Shoreline Road are meant to evoke a feeling of coastal tranquility. Instead, the two dozen or so residents of this New Jersey Shore development, near Atlantic City, feel anything but peace. The Pennsylvania builder went bankrupt last summer and halted work, leaving open foundations, unfinished homes and empty streets that have invited outsiders to dump trash, spray graffiti and race cars.

As America’s housing market has foundered, homeowners who bought into newly rising projects at just the wrong time have found themselves marooned in stalled, abandoned or largely unoccupied developments with little place to turn, placing a strain on them and municipalities forced to pick up the pieces.

Experts say it’s one of the least examined aspects of the housing downturn, and one that has struck many parts of the country, from areas like Las Vegas, which experienced rampant speculation and overbuilding, to cities where construction was more restrained such as the Jersey Shore and Philadelphia.

The housing market remains in the doldrums: All but one of 20 metropolitan areas showed home price declines in January from a year ago, down 10.7 percent overall, according to the latest figures from the widely watched Standard & Poor’s/Case-Shiller home price index. Sixteen of the 20 metro areas posted record lows, with Las Vegas and Miami tying for the weakest market. Only Charlotte, N.C., bucked the trend, eking out an almost 2 percent gain.

Ken Bachman, 37, who lives on a half-empty street in Seapine, feels trapped. When he leaves the house every day, he has to look at an unsightly, unfinished home across the street. Bankrupt Elliott Building Group of Langhorne, Pa., had planned more than 200 houses in the development with prices starting around $300,000, but residents say the community is only about a fifth occupied.

“It’s an undesirable place to live right now,” Bachman said. “Homes have been on the market for sale in here for over a year and they’re just not selling, because who wants to move into a development that’s bankrupt?”

One third of over 200 cities surveyed have seen an increase in abandoned or vacant properties in their communities as well as other forms of blight, according to a report released last month by the National League of Cities in Washington.

Nearly 60 percent said lenders have not offered to help cities deal with the fallout from foreclosures and other problems in housing.

“In more cases, cities are picking up the slack by maintaining the homes, mowing the lawns and making sure that neighborhoods with abandoned housing are safe,” said Christiana McFarland, research manager at the league’s Center for Policy and Research. “It’s a strain on resources.”

More than 25,000 vacant and abandoned properties cost eight Ohio cities at least $63 million, as local governments deal with job losses and the foreclosure crisis, according to a February report commissioned by ReBuild Ohio, a coalition of local government, nonprofit and civic groups.

At the unfinished Seapine Estates, Denise and Kevin Urtubey, parents of a toddler, worry about the safety of their daughter. Cars have raced down the street in the middle of the night; a couple was found having sex toward the back of the development; tubs and other debris have been dumped in empty lots.

“It wouldn’t have happened if the neighborhood’s completed. It’s not a dead-end street. It’s just that nobody’s back there,” said Denise Urtubey, 27.

Like abandoned and foreclosed homes, unfinished houses and projects are not merely community nuisances. They also contribute to the glut of inventory dragging down the market.

In the past year, builders that have filed for bankruptcy include Levitt and Sons in Fort Lauderdale, Fla.; TOUSA Inc. in Hollywood, Fla. and Neumann Homes Inc. in Warrenville, Ill.

Unfinished communities — as was the case with Seapine — are more likely to come from small or medium-size builders because they are more prone to run into financing problems than large builders, said Joe Snider, housing analyst for Moody’s Investors Service in New York. Larger builders, like D.R. Horton Inc., typically won’t leave homes half-finished but will instead build out a phase and stop until demand picks up.

Eric Bryant has been waiting since last June for his upscale Toll Brothers Inc. community in Las Vegas to start filling up.

“Since I moved in, we’ve had one cancellation, 10 homeowners did move in and then no sales since then,” said the 43-year-old real estate agent and tax accountant. He spoke from his home, one of three on the street and 11 in a community designed to hold about 90.

“It’s very quiet, it’s extremely quiet,” he said.

The house looks out over an expanse of rocky desert interrupted at neat intervals by a handful of homes in various stages of completion at the mid-$500,000 and up community. A sign in an adjacent empty lot beckons: “Lot .49 Future home of ——————.”

“I know it will turn around, I don’t know how long it will take. I would like to see growth, but I don’t see it any time in sight for this community,” Bryant said.

Horsham, Pa.-based Toll Brothers did not return calls for comment.

In Philadelphia, where overbuilding has been described as moderate, a glass-encased condominium building called Nouveau promised residents a modern, upscale urban lifestyle. Units were originally priced at $600,000 to $1.5 million.

But since Todd Zaki Warfel, 36, moved in last July, it’s been lonesome: Only four of the building’s 16 units are occupied.

He’s also had tussles with developer CREI LLC, which he said left some areas unfinished for months. The lobby is finally getting tiled and missing glass is being replaced. CREI said it had to replace an architect and there was an incorrect shipment of glass from the manufacturer in September.

When fewer than half of the units in a project have been sold, the developer usually retains control of the homeowners association, diminishing the clout of residents if they wish to get things done.

As for Seapine, Egg Harbor Township officials said they’ve notified the insurers who issued $2.3 million in construction bonds to finish building the streets and other infrastructure or pay the town to do the work. They said they would sue if necessary.

Bank of America has taken over 180 of the lots at Seapine while 22 properties are in litigation over liens, the builder’s attorney said.

Bank of America has received several offers for the lots, Bank of America spokeswoman Shirley Norton said, but that it will be up to whoever buys the properties to decide what to do with the development.

Even a quick sale would not guarantee a quick fix in today’s market. Builders are being squeezed by tightening credit, weak buyer demand and cash flow problems as banks in some cases pressure them to pay down more of their loans as land values decrease, said Dave Seiders, chief economist for the National Association of Home Builders.

That means Denise Urtubey might have to wait a while before Seapine becomes a real community filled with neighbors and kids.

“I don’t know what’s going to happen to the neighborhood,” she said, wistfully. “It’s kind of sad that we won’t have all the people we were expecting to have.”

© 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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