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Builders prepared for boom to go bust

Posted October 1, 2008

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— The nationwide credit crunch has started to hammer the home-building industry in the Triangle.

Permits to build new houses in Wake County are down 40 percent from a year ago, officials said, as builders and buyers find it more difficult to finance their projects.

"The building will come to a standstill," developer Dan Tingen said.

Tingen said he can't purchase lots or get loans to start construction, and he's having more trouble selling homes already under construction.

"Our company is still very creditworthy; the banks are just unwilling to lend the money," he said. "The buyers that we're having for the most part are willing to pay the price we're asking, but their inability to get financing is where the crisis is going to come."

Another Cary developer has plans to put 30 new homes off Evans Road, but he said he wouldn't even start the project until the economy improves.

In Holly Springs, the economic uncertainty has slowed construction at 12 Oaks, a planned golf course community. Wakefield Development Co. said future phases will depend on market demand.

"I think banks are just nervous about lending any money to anyone, especially when it comes to the real estate market," said Tim Minton, executive director of the Home Builders Association of Raleigh-Wake County.

The credit crunch has affected commercial properties as well. The Lafayette and The Hillsborough, two mixed-use towers planned for downtown Raleigh, are both months behind schedule in lining up their financing.

Tingen, who has been in the home-building business for 28 years, said he's prepared to ride out a long slowdown. He said he might work on only 10 homes next year – about half the number he does in a good year.

"If you came to me and said, 'Dan, I've got a neighborhood I'd like for you to look at,' I'd say, "Come back in about three years,'" he said.


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  • hear my voice Oct 2, 2008

    Let's look at the positive side of this issue. First point in being that maybe we can enjoy seeing the beautiful landscape of our area. I am extremely tired of seeing all the shopping centers, malls and subdivisions going up. Secondly just maybe the population explosion will cease which would help the over crowding in our school system. Finally, maybe some of the illegal aliens would leave this area!! This use to be a nice place to live..let's get back to the basics.

  • wrx44 Oct 2, 2008

    Gee....if Tim Minton is stressing over this, then thats at least another positive of this slowdown.

    That guy was all about profiteering off the backs of the citizens of Wake County.

  • seeingthru Oct 2, 2008

    Personally, I am not sorry, the landscape has been ruined by overdevelopment and cookie cutter houses--we don't need anymore..

  • SheriffTruman Oct 2, 2008

    So, all of you who hate the eeevilll builders, I guess your house just appeared out of nowhere on its own?

    I really love the totaly lack of understanding of basic economics here. (though that certainly explains why wer are where we are as a country).

    Builders are in a business. Just like the businesses that nearly all of us work for, they are there to make money by providing a service or product that is in demand. Rare is a business able to create demand for a product (usually something that fills a need that was actually there, but not served) The builders and developers cannot create demand, they respond to demand that already exists by building subdivisions and houses.

  • Jay4 Oct 2, 2008

    So everyone is going to enjoy seeing half built buildings and subdivisions now? THAT is what our landscape is going to look like soon.

    The really GREEDY people are the ones in the US Senate and House (Barney Frank, Chris Dodd to name the worst) who are making MULTI MILLIONS from this bailout that is only going to make things worse - (after termporarily making things better). The really GREEDY people=ones who at Freddie Mac/Fannie Mae made 100's of millions of dollars (Frank Raines-90 million/James Johnson-50 million/Jamie Gorelick-over 20 million) while pushing the sale of mortgages (subprime) to people with no ability to repay the banks or mortgage companies) which is the underlying reason for this "crash". Where is Congress demanding these people go to jail like they demanded of people at the cos who did the very same thing, cooked the books? NOWHERE because OBAMA and DODD and HILLARY were the top takers of the political millions in donations!

  • NE Raleigh Oct 2, 2008

    I wouldn't mind seeing the builders go bust. High prices for substandard homes on tiny plots. If they stop building the existing home values will improve. I believe there is just too much inventory with an unstable economy. This may rid us of some illegal aliens in the construction business, yet another reason to stop building.

  • Road-wearier Oct 2, 2008

    I have no sympathy for the builders. They have run roughshod over the citizens of this county for way too long. They build quick and cheap, out for the quick buck.

    It's not just new builders; the goofball who just finished an addition to the old house we just bought was bog slow, a lousy manager and he did things the way he thought they should be, not the way that we wanted. Nevermind that we wrote the checks. I wouldn't let this guy managed a doghouse build for me now.

  • The Neutralizer Oct 2, 2008

    I visited 12 Oaks in Holly Springs. I have news for the developer, the homes are not selling in part because the builders are still asking way too much for their units. Vinly floors, formica counters little to no incentives, super small lots and almost everything is an upgrade. Oh by the way the base prise is $340,000 for a 2,400 sq feet home. You can get a lot more for your money buying resale.

  • bpjamesncsu Oct 2, 2008

    While the builders aren't blameless, they wouldn't build so many homes if they weren't selling. And they're selling because there has been ( until recently, at least) good job growth in the Triangle.

  • Ajay F.S. Oct 2, 2008

    The greedy builders employ people. If builders can't build, their employees won't be working. This could potentially lead to more hardships for this people in an already troubled economy.

    I speak from experience. My husband works for a residential builder who is based out of Durham. We managed on his side jobs last winter. Looks like another season of looking for side work for my husband, or a career change.