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Home Builders Struggling Against The Tide

By Mike Wheatley | September 8, 2011

Figures for new home sales in 2011 are on track to reach a record new low, says the Wall Street Journal. Following a peak in 2005, when 1.3 million units were sold, the annual rate as recorded in July was just 298,000 units.

Home construction companies

Home builders are struggling to survive © Dennis Oblander -

Most home building companies are struggling to compete with the tidal wave of existing homes on the market, which are selling at super-low prices, thanks to so many foreclosures, short sales and investors buying and flipping homes. This struggle has been going on for almost five years now in some parts of the country.

Some construction companies have resorted to desperate measures to avoid going under, such as pulling back on any more purchases of land in order to conserve cash. Many more have drastically reduced the number of staff on their books to stay afloat.

Other home builders, including the Pennsylvania-based Toll Brothers, famous for building their McMansions, have started looking at different money making avenues. They have began expanding into the condominium market in urban areas, a sector which is showing much stronger signs of life than home building right now. Other builders meanwhile, are coming up with ever-more diverse home designs, hoping the uniqueness of their properties will attract buyers.

The problem, according to Alex Barron of the Housing Research Center, is that "Current markets simply aren't big enough to support all of the building firms we have. What we need is consolidation, which doesn't necessarily mean acquisitions or mergers, but there needs to be some kind of shakeout."


Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
  • 2 comments on “Home Builders Struggling Against The Tide”

    1. Infill; redeveloping established communities is where the big builders should be heading. The schools, infrastructure, fire and police etc. are already in place.

      There are thousands of communities in need of an upgraded housing stock. Many of these structures are functionally obsolete and/or beyond repair. It could certain help some tired communities revitalize without heading into green spaces or by creating far-out towns away from mass transit and city-centers.

      Just a thought.


      Brian Hickey

      1. I agree, that's a good idea. But the only problem is, is anyone going to be willing to pay for these upgrades? I'm not so sure...

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