If they have been maintaining the property for an extended period of time (and it sounds like they've been doing that since the homes were built) then they could argue implied posession and argue that they should be able to buy out the speculator under hostile circumstances for what he payed for the property.
My brother and sister in-law had to deal with an issue like this once after they bought an older home. The only thing that saved their butts was that the issue wasn't brought up until AFTER they had already purchased the home. Had the "neighbor" begun legal proceedings before they bought it they would have had a hell of a fight on their hands in court.
The homeowners have a good case for arguing hostile posession assuming that the option exists where they live.
No they do not.
There are five elements required for adverse posession, easily remembered by the mnenomic OCEAN, standing for Open, Continuous, Exclusive, Actual and Notorious.
Further, the fence builder in this case received his title from the county in a tax sale. Title from a tax sale trumps even regular posession of property, much less adverse posession.
Still further, the owners of the house could not be said to adversely posessing the lake against the interests of the county in taking it for a tax sale. Governmental property interests cannot be lost through adverse posession, for as the saying goes "Nullum tempus occurrit regi". (Time does not run against the King.)
Yet further, permitted use does cannot result in adverse possession. The owners of the homes likely had permission from the original developer to use and enjoy the property around the lake, so they cannot claim adverse posession.
The person to be mad at here is not the fence builder. The original developer of the land, as well as whomever he sold homes to, were lazy, stupid and/or cheap. There are many ways that the land could have been protected from such shenanigans. By cheaping out and cutting corners they took a risk.
This time the dice were against them.