Housing slump spawns ripples

When the national housing market began crumbling precipitating the worst recession in more than a quarter-century, the ripples spread all the way to Waynesboro.

Two of the city’s largest employers, Invista and Mohawk Industries, depend on demand for carpeting in new homes. With construction in the tank, both companies were forced to slash their work forces. And on Monday came the final blow for Mohawk: the company announced it would close by year’s end.

That’s because what surge the company needed in new home building has yet to happen, experts said.

Builder and Realtor Rick Kane of the Westhills Company of Waynesboro said people selling older homes are also more reluctant to recarpet homes because of the tight economy.

The U.S. Commerce Department reported earlier this month that new homes sales increased 0.7 percent in August, a rise that indicated only lukewarm evidence of a housing market recovery.

IHS Global Insight Economist Patrick Newport told The Associated Press that “from a builder’s perspective, the market for selling new homes is still brutal, despite the pickup in sales in recent months.”

That reality is felt here, too, Kane said. There is just too much inventory of newly constructed homes in Waynesboro, Staunton and Augusta County, he said.

“These houses must be cleared,’’ Kane said.

The only new home construction likely to be happening now is a custom or dream home someone is eager to build, Kane said.

Realtor Debbie Shickel of Bishop Realty in Staunton said the slower new home market is evidenced by the length of time new homes are sitting on the market and by the cuts in prices in some instances.

“The $300,000-and-up range are staying on the market a long time and in some cases a couple of years,’’ Shickel said.

She also pointed to one example of a new house that listed for nearly $480,000 when it came on the market in 2007. That house is now listed for $80,000 less.

Kane said sellers of older homes are not recarpeting during the recession. Instead, they want to hold onto the money.

And renovation of homes, which could include new carpet, have taken a hit during the lean economic times, Shickel said.

“People are saying ‘How do I pay my bills’ versus fixing up my house,’’ she said.

In addition to the effects of the recession, Kane said there are other factors that are slowing the opportunities for new home sales.

Lenders are offering more scrutiny of potential loans for new home buyers than in the past.

“It feels like every opportunity a lender can use to get out of a loan they are using,’’ Kaine said.

Shickel said buyers need strong credit scores to receive a loan, and there are situations where that might not be enough.

The Associated Press reports there were 262,000 new homes for sale at the end of August in the U.S., the lowest number in nearly 17 years.