Announced yesterday, Regency Homes (Iowa’s largest home builder) has lost it’s funding through Wells Fargo and has decided to hault all of it’s new construction projects. 

This decision leaves behind 300 houses that lenders will have to finish or sell as is.

Friday afternoon, Jamie Myers (president of Regency) told 103 employees they were out of work.   At the beginning of this year they laid off 27 people attempting to reduce costs of operation and keep throwing up new properties.  My opinion is the writing was kind of on the wall for this one.  No huge suprise (at least for me).  But trust me, I’m dissapointed.

Wells Fargo was the lender that Regency was working with to keep their construction moving forward.  Wells ultimately decided that it was a risk that they were not willing to take (and honestly, who can blame them?).  There are 30 lenders involved in Regency’s overall portfolio.

It was also commented that Regency hasn’t ruled out the ‘B word’.  Scary stuff.

Do you know anyone that wants to buy up some CHEAP new construction property?…. Potentially on tax abatements?… I think I know of a place where you can get some deals…

This is rough news for the new construction market.  I wouldn’t neccisarily say it’s a sign of things to come.. but some builders/developers cannot bankroll their projects like they used to.  I’m not pointing fingers (never have been that guy) but I’m sure more will follow.  You just can’t keep building more and more projects without first selling the existing inventory.

Today I heard an interesting comment from a smaller builder that I know.  It stuck with me (it’s so simple). 

“Banks don’t stop lending you money unless one thing happens, and that thing is making payments on that debt.  As long as you’re making the payments, they don’t care a whole bunch.  Stop making payments, and they’ll get a little upset.”

So, who’s next?  I’ve got my predictions.. but I’ll keep them quiet for now.  I just hope builders slow down on creating more inventory before their current properties sell.  

Yea, I know.. Good Luck at that Tyler. (I even talk to myself through the blog… random)

Tagged as: BK, Default, Foreclosure, Hault, New Construction, Regency Homes, Townhomes