Newspaper article THE JOURNAL RECORD

Home Building May Suffer Weakest Year since 1975 - or '57

Newspaper article THE JOURNAL RECORD

Home Building May Suffer Weakest Year since 1975 - or '57

Article excerpt

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Based on current idications, this will be the weakest year for homebuilding since 1975 - and if things don't improve soon, perhaps since 1957.

That assessment comes from Gene Bishop, president of Lomas Mortgage USA, a Dallas-headquartered financial services company, based on research done for its publication, ``U.S. Housing Markets.''

The conclusion is based largely on a 40 percent drop in first-quarter residential building permits, a certain forerunner of later activity. Total permit numbers have now declined in 17 of the past 19 calendar quarters.

According to Brian Bragg, editor of the publication, the declines come despite indications that markets in some parts of the country, such as Texas, are now beginning to show an opportunity if not a need for new units.

The outlook contrasts somewhat with that for existing home markets, which have shown faint signs of recovery, aided in part by lower interest rates, lower prices and improving weather conditions.

The new-home market, however, responds to a different set of economic considerations, especially in the multifamily sector. The latest burden, Bishop says, is a lack of funding.

From coast to coast, developers find few lenders interested in financing new projects, he says. Equity partners are hard to find. And the insurance industry, historically a good source of funding, has problems of ts own.

Moreover, Bragg says, after nearly five years of industry recession, many builders have dissolved their operations or wound down activities to mere survival mode. In itself, he says, that could put a drag on recovery.

The report, based on counts of permits in major markets throughout the country, differs sharply from some other projections made in real estate markets, where a tendency exists to find some ray of hope in grim figures.

Bragg says he simply didn't see any improvement in the data. …

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