New House Construction Players in Cleveland Frustrated
The National Association of Homebuilders expressed that companies involved in new house construction have more confidence now than in the past months. However, last Tuesday, the Commerce Department released data that shows new house construction decreased to a record low.
Home builders are now in a very difficult situation. In any type of house, whether it is an apartment or a single-family home, there seems to be very little hope. This was even more evident as home builders convened last Wednesday in the Home Builders Association of Greater Cleveland annual meeting. This event was aimed at answering answers and addressing issues regarding house construction. Particularly voiced are the frustrations of home builders towards banks who deny the request of companies for loans.
Present in the meeting to represent the Fed are Emre Ergungor and Paul Kaboth, a senior research economist and an assistant vice president in banking supervision, respectively. Ergungor addressed the issues concerning the housing market in view of the larger economy.
On the other hand, Kaboth explained issues regarding the Fed’s methods on examining bank loans and assigning values from 1 to 5 to financial institutions. The values represent the stability of a bank. 1 means that a bank is still sound, while the value 5 means that the bank is already endangered and might fail in the near future. With this, he said that the Fed would give necessary help to banks who are already in danger.
A lot of home builders reacted with anger and frustration, as they see their industry to be on the way to collapse soon. According to Pat Perrino, a business owner of construction, suppliers are now down to working for a mere two to three days a week. His business has gradually slowed down, and he says that he does not see anything which could improve the way things are going now.
A lot of home builders have the same sentiments as Perrino, saying that they need more regulators to work with financial institutions in order for them to be able to get their businesses back on track. The problem seems to be more than getting land, constructing houses and developing them. Home builders said that existing credit lines and loans need to be addressed for the new house construction industry to bounce back again and recover completely.
