Financial crisis strikes metro homebuilders

Tuesday, October 14th 2008, 7:03 pm
By: News 9

By Charles Bassett, NEWS 9

OKLAHOMA CITY -- The national financial crisis is putting a strain on local homebuilders.

In the Lone Oak subdivision just north of Galardia, the company that built the homes was thriving, but now home sales have slowed and the company has to cut back.

The Lone Oak subdivision is one of the biggest for Brass Brick Homebuilders, but the financial crisis is threatening the company's very existence.

"We've had to do some downsizing, unfortunately, and had to lay off some people which is a hard thing to do especially when we're a family-owned business," Brass Brick president Ashley Cunningham said.

The company is having money problems and the economic crisis is making it harder to get loans to fund their operation. Cunningham said they simply didn't borrow enough to make ends meet.

"We borrowed 70 percent of the loan value where a lot of times people borrow 85 to 90 percent, and so you get into a little cash-flow situation because of that," Cunningham said.

Cunningham is in the process of restructuring her business.

Still, she's faring far better than Bridgeport Development, which operates LivingstonMeyer Homes. The company is completely shutting down its homebuilding operation. It's now trying to sell its existing homes to keep from filing bankruptcy.

Despite the setbacks for these two companies the Central Oklahoma Homebuilders Association said the Oklahoma market is still strong, mainly because housing prices remained steady while skyrocketing in other parts of the country.

"Appreciation is something that has to occur slowly, and develop with your market," Jim McWhirter with the Central Oklahoma Homebuilders Association said.

Mcwhirter said the association has about 500 members with only two appearing to be in trouble. Meanwhile, Cunningham hopes to be back on her feet in a few months.

"We've made the right decisions and the right cuts to be able to get fully operational again, and move forward and have a great 2009," Cunningham said.

The homebuilders association said the presidential election can slow home sales as people want to see who will be elected before spending their money.

The Oklahoma Association of Realtors said existing home sales statewide have dropped 13 percent from this time last year, which was one of the state's best years for home sales. However, home values have increased by more than two percent.