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Home Building Trouble, Here And Elsewhere

Kepler Road home construction, October 2006.

Kepler Road home, October 2006.

A number of the nation’s new home builders face more trouble during the next six months as they try to weather the storm in mortgage and housing markets, according to research released today (Sept. 10, 2008). And U.S. Census Bureau statistics show Lower Pottsgrove (PA) Township (which includes Sanatoga) reflects a national trend of declining new home construction.

Small- and mid-sized builders are now at greatest risk as a result of the country’s failing economy, according to an analysis by a Boston firm. Grant Thornton Corporate Advisory and Restructuring Services looked at higher loan costs and plummeting cash flows of builders across the U.S., and in its report concluded local and regional players in the $700 billion business will be forced to merge with larger ones to survive.

It also said new home buyers benefited from builders’ problems. Many are offering credit to consumers, or cutting prices to reduce their inventory of unsold homes.

Some contractors just stopped building.

The U.S. Census Bureau reports that for the seven-month period between January and July 2008, the last month for which figures were available, Lower Pottsgrove issued only 5 building permits for new privately-owned residences. They were reported to have a total construction cost of $620,370. Compare those numbers to the same seven-month period during 2007, when the bureau says Lower Pottsgrove issued 22 privately-owned residence construction permits with a cost value of more than $2.7 million.

In fact, census figures show, the number of permits issued by the township during July 2007 alone equal the total issued so far this year.

Construction costs usually are significantly lower than the actual market values of the homes built.

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