Housing crisis leaves many in the dust
TEXT OF STORY
Kai Ryssdal: There’s a standard cast of characters that’s mentioned when you start talking about the housing market. It’s homeowners, mortgage companies and investment banks that’re getting hurt, the story goes. But there’s a trickle down effect, too.
Today’s sign of the housing bust is a company called Beacon Roofing Supply. First quarter profits were off 40 percent from a year ago.
This crash is burning plenty of people who never fooled around with reckless loans or flipping properties. Marketplace’s Steve Tripoli found some of them last week in South Carolina.
Steve Tripoli: Gary Drejza’s cruising in his Mercedes through an oddly-unfinished housing development. It’s part moonscape, part manicured suburb and it’s called Seasons at Prince Creek West.
Drejza slows down by a big ugly patch of stripped earth.
Gary Drejza: Here’s my lot right here.
He stops, kills the ignition and gets out.
Drejza: Lot 49, there it is. Big pile of dirt and mud.
Drejza was selling houses at Seasons, here in South Carolina’s coastal low-country near Myrtle Beach. Sales were brisk at first. He liked the development so much he put his own deposit on what was to be an investment property.
Drejza: As rapidly as the project was selling out, I felt it was a great investment.
But nothing’s going up on his land anytime soon. Drejza’s deposit and those of many others here may be lost.
Back in the car, Drejza spots one of his customers who did move in. He rolls down the window:
Drejza: We’re lookin’ for ya, I’m glad we gotcha. Mr. Podkulski.
Tom Podkulski: How ya doin’?
Drejza: How are ya?
Retiree Tom Podkulski was a homebuilder. On the day he went to close on his home here, he heard the developer was in big trouble.
Podkulski had already put down a $70,000 deposit. His lawyer advised him to take title to the house and see what happens rather than risk that money.
That turned out to be good advice. So Podkulski moved in, but he’s not thrilled about it. Over coffee in his spacious dining room, he explains his dilemma:
Podkulski: Leaves me with a house I can’t sell. And money, if I tried to sell it, if I had to sell it, I’d lose a lot of money.
That’s because developer Levitt & Sons filed for bankruptcy the day after Podkulski closed. Levitt’s a fabled name in homebuilding, the one behind America’s first suburb Levittown. That name had been a selling point here.
Seasons was to be built around a fabulous, 27,000-square-foot clubhouse, complete with an indoor pool and computer-equipped learning center. But the clubhouse’s unfinished frame is all that stands. Construction’s been frozen by bankruptcy. Just a fifth of the 460 homes are finished and occupied. Podkulski says Seasons is a long way from its promise.
Podkulski: Everybody came in here with the lifestyle, with the clubhouse, with the swimming pool and none of that has been done. So what we do now is basically we walk and ride bikes. Nothing else to do here.
Levitt & Sons’ parent company is the first big American homebuilder to go under in this crisis. It buckled under a tidal wave of overbuilding, overpaying for land and overestimating demand.
But big homebuilders nationwide face their worst crisis in decades and damage from the huge supply of unsold homes they built is rippling to lots of innocent bystanders.
Gary Drejza and Tom Podkulski are just two of them. Gary Stringer’s another. He owns a home renovation business where his leading economic indicator is his own telephone:
Gary Stringer: It’s not ringin’ as much now. Right now, it’s a little slow.
Stringer says everyone’s gripping their wallets tightly these days. People looking for a change aren’t sure if fixing up or moving makes more sense, so they’re sitting tight. Stringer’s Yellow Pages ad is drawing a few calls, but not always the kind he’s looking for.
Stringer: Instead of getting a call or two here and there from potential customers, I’m getting a call a day from other contractors who are out of work. They’re needin’ some work, you know?
Stringer says the economic uncertainty spawned by the housing crunch is contagious:
Stringer: I think people during times like this tend to kind of sit tight due to uneasy feeling about their job security, the stability of the business that they’re in, and they just don’t wanna make any major moves.
One person making no major moves for sure is Tom Podkulski, who’s stuck amid the unfinished construction lots at Seasons. He’s damned if he stays and damned if he sells, so his solution is to just stay cool:
Podkulski: Hey, I gotta live with it. You know? What am I gonna do? Stay awake and worry about it? Can’t do that.
His equanimity may not be easy to copy, but it may be the only strategy as Americans watch the housing and credit crunch eat through an ever-wider circle of bystanders.
In Murrells Inlet, South Carolina, I’m Steve Tripoli for Marketplace.
There’s a lot happening in the world. Through it all, Marketplace is here for you.
You rely on Marketplace to break down the world’s events and tell you how it affects you in a fact-based, approachable way. We rely on your financial support to keep making that possible.
Your donation today powers the independent journalism that you rely on. For just $5/month, you can help sustain Marketplace so we can keep reporting on the things that matter to you.
