House Buliding Industry Case Study Example | Topics and Well Written Essays - 2500 words

House Buliding Industry - Case Study Example (Dunlop, 2000) Home building and selling industry have been one of the industries in the US that have been hard hit by the current economic crisis. For along time now, the home industry in the US has recorded massive growth due to the rising demands of new home and due to the response of the financial services for provision of funds to purchase homes. In the last two decade the home building industry has been recording massive growth and it had attracted many investors. There has also been massive input by the financial sector as they lent out money for the construction of these homes. Since 1980s, there have been increasing trends towards individual ownership of homes which has been the main reason behind the growth of the industry. (Allan, 2007) My company is one of the major players in this industry and has been in the industry for along time. Established in 1970s the company has been working closely with other major players in the industry and has been able to grow. It has been building and selling homes in all states in the country. With its base in New York, the company has established branches in 15 states where it has been building and selling residential and business premise. However the company has been facing many challenges in the industry although it has still held on. Let us look at some of the challenges that the company has been facing in regard to the changes that have been taking place in the industry. Challenges being faced by the company There have been many challenges that the company has been facing in its operation in the industry. These have been related to the changes that have been taking place in market which are being affected by the fluctuating rate of growth of the economy. In order to understand the challenges that the company has been facing, we need fist to understand the US home industry so that we can deduce how the company has performed relative to the changes that have been taking place the industry. The US home buying industry has been recording changing times since it was formed. This has been driven by the fact that the industry is driven by subprime mortgages which have been changing with time. In the 1980s, there have been increasing changes that have taken place in the financial institution that have been contribution to these changes. Most of the companies that have been involved in building and selling of homes have been relying on financial institution to provide loans of building those homes which they sell and repay later. The home buyers also rely on financial institution for money to buy homes which they pay in terms of mortgages. Therefore as the value of homes rises, home builder flock the financial institution in order borrows and invest more in building homes. This has been the practice that has led to increased homes in the United States. (Casey, 2008) However in the recent past, there have been increased decline of home value and more and more homes are facing foreclosures. This has been contributed by increased inventory on unsold units in the country which has led to decline in the price of homes. This has been contributed by many factors including the practice of financial institutions. Due to the rate of falling home prices, many home builders have been struggling to sell their remaining unsold units in order to avoid losing more value which means more loss on their investments. This has caused increased rate of interest and the