“During the earlier housing downturn, which was triggered in part by the collapse of the subprime-mortgage market, about half of all home builders disappeared. Home builders that lived through that said they learned some hard lessons, and that the current slowdown won’t lead to another industry implosion.” Nicole Friedman writes in the Wall Street Journal
- Learned their lesson. Friedman writes that “Home builders have been more conservative in recent years about taking on debt and owning a lot of land, industry analysts said. Some home builders have increased their use of land banks or other third-party arrangements that give them the option to buy land only when they need it.”
- Rapid Deterioration. While the downtown itself has not caught the builders by surprise the speed of the downturn has. Ivy Zelman, chief executive of real-estate research and advisory firm Zelman & Associates, told the Journal, “How rapidly things have deteriorated is pretty remarkable…[but] there’s a huge difference from the go-go days of exotic mortgage products and no money down,” she said, referring to the loose lending environment before the 2007 crisis.”