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Recession Tougher on Smaller Builders : Construction: Eighty of Orange County’s 105 home builders shared only 23% of sales through September. Low consumer confidence, tight credit blamed.

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TIMES STAFF WRITER

The recession has not been kind to home builders. But it has been particularly merciless this year to the small and medium-size builders, a recent survey indicates.

Twenty-five of Orange County’s 105 builders accounted for 77% of new home sales during the first nine months of 1991, according to the Meyers Group, a Corona del Mar market consulting firm. That left 80 other builders scrambling for only 23% of the county’s 6,130 home sales through September.

Well-known builders top the list: William Lyon Co., with 615 sales of detached and attached homes, representing 10% of the county total; Kathryn G. Thompson Development, with 335 sales, or 5.5%; Fieldstone Co., with 330 sales, or 5.4%; J.M. Peters Co., with 273 sales, or 4.5%, and Woodcrest Development, with 269 sales, or 4.4%.

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“When consumer confidence is low, people would rather buy homes from a name-brand builder,” said Jeff Meyers, principal of the Meyers Group. “They want to know that the builder will be around in the future to provide customer service.”

Another factor working in favor of larger builders is their easier access to financing in the current tight credit market, said Sanford Goodkin, a San Diego real estate consultant.

“The ultimate reality is that builders are starving to death because the banks won’t lend them money,” Goodkin said. “And when they do lend money, it tends to go to the larger builders.”

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Meyers estimated that about 7,100 new homes will be sold countywide by the end of 1991, up 5% from 6,809 homes in 1990. He predicted that the total will rise to 7,500 to 7,800 homes next year as the economy, with luck, continues to recover.

“There are a number of lots being sold for 20% to 30% below top-of-market price,” Meyers said. Home builders picked up the properties at a bargain from troubled developers and from financial institutions that had foreclosed on the land. Many of the sites are already graded and ready for construction.

Expect more three- and four-story condominiums to go up in Orange County over the next two years, Meyers said in his quarterly forecast. “Builders traditionally have thought that home buyers in this area wanted an attached garage and stayed away from multilevel complexes,” he said. But the success of the Metropolitan, a new, moderately priced complex in Irvine, has made developers rethink that philosophy.

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The 97-unit complex, priced from $143,900 to $261,000, is a three-story building with underground parking. “It has attracted young, professional, first-time buyers,” Meyers said. “A high-density building is one of the best ways available for economizing.”

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