What could be more appropriate and timely? The model dream home being constructed for the NAHB is an empty hulk, done in by lack of funding.
Domanico Custom Homes, the small private builder selected for the project, had to halt construction this month after a private investor pulled out. Now, Domanico says, the home has a “fire sale” price tag of $1.8 million, and the company warns that a big loss could put it out of business.
Banks nationwide are saddled with so many nonperforming construction loans to real-estate developers and builders that most have pulled away from the industry, especially in such markets as Las Vegas that have lots of troubled loans and plummeting home prices.
Domanico lost its private investor in February, and at least six banks have turned down the roughly $1.7 million request to complete construction on the remaining 25% of the home, according to Adam Knecht, Domanico’s general manager. The home had been priced at $3.39 million in August.
Domanico is pursuing private funding, but nothing has come through. “The market is dead for construction loans,” said Mr. Knecht.
The latest turn of events means the nation’s biggest gathering of home builders, which takes place in January, could be without a showcase home for the first time since 1984, when the concept premiered.
Jerry Howard, the NAHB’s chief executive, said the group is coming up with contingency plans in the event that the home isn’t available for tours by conference attendees. Topping the list: a computerized virtual tour of the home.
“There’s nothing like walking through the finished New American home, but we’re going to have to come up with the next best thing to satisfy the expectations,” said Mr. Howard, who said the NAHB tried without success to tap its contacts to help Domanico.
In some years, as many as 120,000 people attend the convention — one of the nation’s largest. And tens of thousands tour the home — it is usually the site of several invitation-only soirees — and it receives global press, ranging from industry Web sites to glossy fashion magazines.
The lack of access to capital is forcing private builders out of business at a “phenomenal” rate, said Ara Hovnanian, chief executive of the public Hovnanian Enterprises Inc., at an industry conference this week. “It’s scary, the number of home builders that are closing their doors,” he said.
Domanico has spent $800,000 out of its own pocket on construction, Mr. Knecht said. With no additional capital, the previous goal of finishing by October has long passed. The current $1.8 million sale price would finish construction and pay off lien holders. Domanico owes subcontractors, ranging from electricians to stonemasons, $400,000.
“There’s nothing else I can do,” Mr. Knecht said. “I feel bad for how things have gone, and I’m not especially positive about how things are going to turn out.”
