Builders Meet, Hear Little to Cheer

Speakers at the National Association of Home Builders' annual convention are not very optimistic about the sagging housing market turning around any time soon. "At some point, new household formations will drive what we all need and we are going to get back to a run rate of over one million new home sales," Stuart Tyrie of Wells Fargo Home Mortgage told the NAHB's single-family finance subcommittee. But that won't be until 2014 at the earliest, he ventured. Mr. Tyrie, who runs Wells Fargo's National Builder Division, said the fallout from the subprime debacle is "behind us," but failures among borrowers who hold option ARMs will run "well into 2012." Mike Sivage, a builder-developer from Albuquerque who chairs the group's Financial Institutions and Capital Markets Subcommittee, said the New Mexico market is continuing to decline. "It's not getting any better where I am," he said. Even Texas, one of the lone bright spots, is starting to fade, according to Kent Conine, a past NAHB president who chairs the group's AD&C Financing panel. "We did fine until the oil prices tanked," the Dallas builder said. People are still visiting model homes, but now, like in other parts of the country, they are waiting for prices to hit bottom, he said. Daniel Finnegan, a Florida-based consultant who advises builders on construction financing, said it could be two years before lenders have enough liquidity to weather regulatory scrutiny. Until then, he said, money to buy and develop land will be hard to come by. Bill Rothman of IndyMac Bank, Irvine, Calif., agreed. "We have a lot more pain to endure," he said.