Home Builder Copes with Changing Economy

How are changes in the economy forcing Americans to adapt? In central Illinois, home builder Terry Ruhland has had to dial back and alter his business plan because of a slowdown in the housing market.

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RENEE MONTAGNE, host:

This is MORNING EDITION from NPR News. I'm Renee Montagne.

JOHN YDSTIE, host:

And I'm John Ydstie, sitting in for Steve Inskeep.

Whether it's housing, the falling dollar or a volatile stock market, the news about the U.S. economy these days is unpredictable and often grim. This week on MORNING EDITION, we're going to take a look at how that unpredictability and bad news affects real people - people who are struggling or who are having to adapt because their marketplace has changed. The housing market certainly has had its share of bad news this year, and it's making life tough for sellers, buyers and builders.

Terry Ruhland builds homes throughout central Illinois. He joins us from member station WCBU in Peoria, Illinois.

Welcome to the program.

Mr. TERRY RUHLAND (President, Plum Creek Builders): Thank you.

YDSTIE: Tell us a little bit about the kind of homes you build.

Mr. RUHLAND: We're primarily a move-up home builder. We specialized in homes that are typically 3,000 square feet and above, and in a price range that's generally 350 to 500,000.

YDSTIE: And what is the housing market like where you are?

Mr. RUHLAND: Well, I would probably characterize it as only slightly off from what we're used to. It is relatively strong. It is probably somewhat dynamic in the types of homes that are selling compared to the types of homes that were selling a year ago.

I would say that the nervousness in the market is probably condensed to the higher end of the market. The homes that we typically sell - more custom-type builders typically sell are probably the ones that are feeling the impact of the latest lending crunch, and entry-level and mid-level homes are holding their own.

YDSTIE: Do you feel that you're experiencing fallout from the whole subprime-lending crisis?

Mr. RUHLAND: Fallout is a good word for it. I do think it has more to do with a fear at the marketplace rather than a reality in our area. The Midwest has not seen as much of the problems with the lending as well as it have not seen as much in a way of foreclosures. So we feel like most of the people who are showing some nervousness about the market are getting that from media.

YDSTIE: Hmm. The media is telling all these stories about the West Coast and Florida and et cetera, and that's scaring people off in central Illinois.

Mr. RUHLAND: That's exactly what's happening, at least for the lion's share of what we have seen, which in our area, it's been a 4 to 7 percent falloff, which is not a lot for a small volume builder like us.

YDSTIE: Do you think it's because the kind of sort of risky loans, the balloon loans, the adjustable-rate mortgages that a lot of people had to get in order to get into the housing market in those very expensive areas, that you didn't have those there?

Mr. RUHLAND: I think people weren't using those here. I think we have a very healthy market. There was really no need for lenders to be as aggressive as they have been in other markets. We happen to have, in central Illinois, an economy that is supported by a lot of global industry - Caterpillar is a great example of a very global company - as well as an expanding medical community here in Peoria.

And those industries have really supported people who - you know, people are making their payments. They're not losing their homes in central Illinois. And so we're not experiencing the kind of problems we are in the rest of the country because the lenders made good, responsible loans to good, responsible people, it would appear.

YDSTIE: You've suggested, though, that there are some changes in your market. People are not as interested in really big homes, and falloff overall, 5 percent or so in terms of sales. How are you adjusting to that?

Mr. RUHLAND: I think it probably is best for the builders who have found a niche. In my particular case, we have tried to respond to the fact that the baby boomers are the biggest part of the market right now. Most of those folks are interested in downsizing. So we're specializing in a smaller house with high quality features.

Along with that, I have done some work myself in the Floodplain Development, opportunities that come along being on in the Illinois River. Whereas, in the past, floodplain properties were considered almost distressed. And now with careful adherence to FEMA guidelines and the local ordinances, we can build some beautiful homes along the river.

YDSTIE: Well, thank you very much.

Mr. RUHLAND: Thanks, John.

YDSTIE: Terry Ruhland is the president of Plum Creek Builders in central Illinois.

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