In a testament to the severity of the housing crisis, the nation is poised to lose about 50% of its homebuilders according to an article in Builder Magazine: “Industry sources expect half the home building companies that did business at the peak of the market in 2005 to be around once the market bottoms.” While some would say that’s a good thing—we’re overbuilt and need to thin the ranks of homebuilders—the reality is, the impact is much greater than just the loss of the builders; there will be thousands of additional jobs lost.
Most of the builders had employees, some hundreds of them, and of course, those employees will also lose their jobs—a chart in the article shows that sixty-nine home building companies, that built 100 or more homes a year, have already filed bankruptcy or just closed their doors. Each of those builders also supported countless other businesses and contractors. The loss of those jobs just adds to the overall malaise in the economy.
Hundreds of other builders are barely keeping their heads above water, and many more will fail as loans are called, credit is unavailable, and inventory and operating costs consume their remaining cash. When the market returns—and that will be in the somewhat distant future—we’ll be left with a few major players who will have the majority of the business and the resources to move ahead. The smaller companies, will find it difficult or impossible to secure financing, and will struggle for years to regain position; and the business as we’ve known it will be forever changed. Time will tell whether or not this will be a positive change. Quite honestly, I don’t know.
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