According to an article in the Dallas Morning News, over 24 homebuilders have essentially shut down and are facing bankruptcy because they don’t have the funding to continue operations. Many buyers and otherwise healthy companies are being caught in the whirlwind of bankruptcy, foreclosures and credit contraction sweeping the country.Many may think this is just he price to be paid for greed and bad business practices; but even well run companies are facing bankruptcy according to the article:
… even builders who don’t make business mistakes can be shut down when they can no longer borrow money. In some cases, lenders are even demanding repayment of loans that are in good standing, said Ted Wilson of Residential Strategies.
The result is that there is a ripple effect throughout the real estate industry affecting sellers, buyers and builders many of which are now facing bankruptcy. Those bankruptcies and the threat of bankruptcy is sending builders to cut jobs drastically in anticipation of the worse.
“Layoffs have been rampant throughout the industry,” Wilson recently told a meeting of real estate execs. “Not a day goes by that I don’t hear from someone who’s out of a job.
“We could more than fill this room.”
Unfortunately, more bankruptcy is expected in the home building industry as many face tough times for finding credit and clients.