Slow home sales aggravated by gulf crisis


November 26, 1990|By Michael Enright | Michael Enright,Special to The Sun

"In these [economic] times, all you try to do is trim it down to the minimum and wait it out," said Richard Azrael, president of Chateau Builders Homes in Howard County.

"Lean and mean," echoed James Greenfield, co-owner of Columbia Builders.

The advice and comments from small builders in the Baltimore area who are weathering the current economic storm in the building industry are all alike: Cut your costs and hold on because things have got to get better.

The Commerce Department reported last week that housing starts plunged 6 percent in October, their lowest level since the last recession. Building permit applications dropped to their lowest level since 1981-1982.

Sluggish home sales in New England and the mid-Atlantic area are a key factor in a 15 percent increase in the rate of business failures in the first nine months of this year.

Many small builders in this area concede the housing market is in one of the worst slumps they have ever seen, but they are quick to point out that low interest and mortgage rates coupled ** with a large inventory of homes for sale makes today's market a buyer's dream.

The crisis in the Middle East, however, appears to have evoked fear in many potential buyers.

"Everybody is frozen in their tracks, and I can understand why," Mr. Greenfield said. "Things were pretty bad in the mid-'70s and the early '80s, but at least then you knew that the prime rate couldn't stay at 22 percent. . . .

". . . But with the threat of war, nobody can hang a number on it," he added.

To make it through this year and the next, some builders say they have cut their staffs to the bone, increased the responsibilities of the employees they have kept and dismissed any offers to build on speculation.

Mr. Azrael says the big question these days is projecting how many homes his company will build in 1991 and planning accordingly. This year will see a 30 percent decrease on 1989 production levels, he said, and the same rate is expected for 1991.

Some builders say a downturn in the economy calls for an upswing in the advertising division.

"Everybody on our side of the business knows how attractive the housing market should be to a buyer, but the houses aren't going anywhere," said a Towson builder who asked not to be identified.

Chateau Homes built 74 units last year, expects to build 116 by the end of this year and projects 71 for the new year.

"We're so lean and mean that when we go from 40 to 90 homes a year, we don't need to add staff," Mr. Greenfield said. "And the same's true when we go down. My people are probably starting to enjoy their lives a little more."

Michael Enright is a Baltimore free-lance writer.

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