Marketscan
For U.S. homebuilders, 2009 will be worse
The U.S. housing slump is set to worsen in 2009, as fallout from this year’s plunge in the stock market and consumer confidence continues to cast a pall over potential buyers.
Builders will find themselves increasingly cash-strapped and forced to pull out of more markets and cut more jobs.
“As weak as it’s been, it could get weaker,” said Fitch Ratings analyst Robert Curran, who has detected a tendency on the part of forecasters to shift their predictions of a 2009 housing market bottom into 2010. Homebuilders collectively see that loss of consumer confidence driving the entire industry “another leg down,” UBS analyst David Goldberg wrote in a client note.
To guard against that danger, 2009 will likely be another year of cuts for homebuilders, said industry consultant John Burns, whose eponymous firm is based in Irvine, California.
Builders have already pulled out of 82 metropolitan areas, Burns said.
“I think you’re going to see that accelerate.” The logic of scale will force the retreat. “You either have to be selling 10 homes out of your pick-up truck or several hundred homes that support a large operation,” Mr. Burns said.
— REUTERS
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