Builders

By
Real Estate Broker/Owner with Summit Realty Group, Inc.
Daily Real Estate News  |  March 28, 2008Slow Sales Drive Some Builders to Brink
Small and mid-size builders in regions of the country where housing sales are slow are facing bankruptcy in increasing numbers. Delinquencies on loans to build single-family houses reached 7.5 percent of the value of all such loans in the fourth quarter, up from 2.1 percent a year earlier, according to Foresight Analytics, an economic and real-estate research firm.

"Even rock-solid, generational businesses are taking desperate measures," says Jerry Howard, the chief executive of the National Association of Home Builders.

While the industry group does not track bankruptcy filings by its members nationwide, its Atlanta affiliate estimates that as many as 20 percent of local builders are behind on interest payments. Banks there are requiring some builders to pay off their loans in full or contribute additional equity that they don't have, according to the 2,000-member Greater Atlanta Home Builders Association.

States with the highest delinquency rates for construction loans for single-family homes in the fourth quarter of 2007:
  1. Michigan: 14 percent
  2. Ohio: 13.7 percent
  3. Arkansas: 11.1 percent
  4. Arizona: 10.3 percent
  5. Minnesota: 10.0 percent
  6. Florida: 9.9 percent
  7. Georgia: 9.6 percent
  8. South Dakota: 9.2 percent

Source: The Wall Street Journal, Michael Corkery (03/21/08)

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