There’s a new trend that shows larger home building companies are buying up smaller home builders that are having difficulty finding the financing that they need in this economy. In the past, these small private builders relied on their hometown banks to provide them with funding but these sources dried up and many failed during the financial downturn. Without this financial resource small builders aren’t able to buy land and develop.
FDIC statistics report that dollar values of construction and development loans have declined by 68% since early 2008.
Larger companies have access to financing and a recent WSJ article states that the bond market has been beneficial to these larger home building companies and with their ample financial resources they have been buying up the little guys.
The 10 largest publicly traded builders were responsible for selling 24% of new homes in 2007 and 30% of new homes during 1Q 2013.
Read the entire Wall Street Journal article here. http://online.wsj.com/article/SB10001424127887324694904578603732063335740.html#printMode?KEYWORDS=big+builders+gobble+up+rivals