Small Builders Recover As Housing Market Rebounds

March 26, 2012 / Russell Legato, Residential Property Analyst

Small homebuilders are seeing increased business in conjunction with that shown by commercial real estate trends. During the crisis, the focus was on big builders like Beazer Homes USA and Toll Brothers. Private builders also experienced the recession. In 2009 one Ohio builder sold only 12 homes in 2009 and expects to sell 21 in 2012. This is in comparison to the six it sold in 2010 followed by seven in 2011.

Small Builders Recover As Housing Market Rebounds

Numerous small builders collapsed due to the market in 2007. The current job market’s improvement is bringing interested home buyers to the table again. In January and February alone, one Atlanta builder closed on 18 properties. That compares favorably to the two sold in the first two months in 2011. Showings are on the rise in Atlanta, Georgia and Jacksonville, Florida. Some agents reported four showings in a day. That compares to one a day at this time last year.

In spite of recent activity, there is still serious concern about recovery. The Commerce Department reported 304,000 sales in 2011. The first two months of 2012 shows that sales are up in previously occupied houses. In Chicago, buying a new home depends on selling an old home. Often buyers cannot sell old homes, and due to the contingency clause cannot close on the sale of a new one.

Home improvement companies are still suffering. Homeowners don’t want to invest in remodeling costs if they are not sure they will recover the cost when selling. There is reason for optimism. The corollary companies dependent on the real estate industry are beginning to note some activity, a good sign that the recovery will be permanent.

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