The Housing Chronicles Blog: Did public builders destroy the market for private ones?

Monday, November 24, 2008

Did public builders destroy the market for private ones?

Boyce Thompson, Editorial Director for magazines such as Builder, Big Builder and Multi-Family Developer, has an interesting blog post online asking if the obsession by public builders to chase market share and improve their balance sheets ended up destroying the supply-demand balance of local markets. From his post:

There are many private builders out there who lay the blame for the housing boom, and subsequent bust, at the feet of public builders whom they say built homes and market share at any cost. These same builders, they argue, continued to pump out specs after the end came in an attempt to work off land inventory, at the expense of every other builder in the marketplace.

This argument holds some water. The publics did build up massive land inventory. They wanted to show The Street that they could feed a well-oiled home building machine that was cranking out 20 percent revenue growth, even in the face of mounting public resistance to development. Then, when the end came, they were forced to sell off land to generate cash. And they took impairments on what land they couldn't sell...

Click here for full blog post.

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