Homebuilders feel economic pinch
Posted January 8, 2009 10:39 p.m. EST
Updated March 9, 2009 5:12 p.m. EDT
Raleigh, N.C. — Two years ago, Trey Gaylord said, his family's home-construction company built more than 25 homes. Now, the Gaylords have no homes under construction and hold seven unsold houses.
Gaylord, of Richard Gaylord Home, Inc., said the economy has affected how the company has priced the unsold homes, too.
“We know the market is down, and we have tried to be real careful about pricing things correctly,” Gaylord said.
One home, with a marble entryway, spacious kitchen and office, could have sold for up to $875,000 in a good market, Gaylord said. Now, the home is priced at $750,000
“What is common across all income spectrums is fear,” North Carolina State University economist Mike Walden said Thursday.
Walden said consumers have lost roughly 11 percent of their wealth so far in the current economic downturn.
“Who has the most wealth to lose? That tends to be high-income people,” Walden said.
Homebuilders say they believe people are interested in buying new homes, but they don't because they are worried about the economy.
Some homebuilders say government incentives could make a difference. They say tax credits and low mortgage rates could get Americans spending again on real estate.
Walden said he believes incentives could be a move President-elect Barack Obama is ready to make.
“I think you could make a strong argument the housing market has to recover first before the broader economy recovers,’ Walden said.
Walden said a turn in consumer confidence and spending is the quickest way to turn the economy around.
Consumer spending accounts for about two-thirds of the U.S. economy.