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SAN FRANCISCO HOME BUILDERS CONCENTRATE ON CONTROLLING COSTS TO WAIT OUT THE ECONOMIC STORM, SURVEY SHOWS

 Majority Think White House Won't Help Real Estate
 SAN FRANCISCO, Nov. 17 ~PRNewswire~ -- San Francisco Bay Area


home builders are battening down the hatches -- concentrating on controlling overhead by downsizing operations in an effort to wait out the recessionary economy, according to a recent survey from Kenneth Leventhal & Co.
 "More than half the builders we talked to think that lower housing prices and special tax credits for first-time homebuyers are key to helping jump-start the real estate economy, not the administration," said Elliot Lefferts, co-managing partner of the national accounting firm's San Francisco office.
 In addition to reducing overhead, Lefferts said those surveyed also are reducing inventory and pricing to be competitive. "They are trying to break even in a down market," he added.
 Among survey respondents, survival strategies include building affordable homes and in general being conservative -- saving cash and reducing borrowing. Others are weathering this economy by being more selective with projects and liquidating the slow moving ones.
 The survey of home builders, which ran the gamut from custom home to large tract developers, shows half the respondents predict higher sales this year compared to 1991, while half feel sales will drop below last year's levels.
 Thirty-four percent of the builders said banks will remain their chief source of funding, followed by joint venture partnerships and institutions.
 By a margin of three-to-one, the builders felt financing would be harder to come by in the future, and the majority believed the costs of borrowing would go up. When asked to predict the average outside costs of borrowing, the respondents were evenly split between ranges of 5 percent to 7 percent and 7 percent to 10 percent.
 Two-thirds of the respondents said they had initiated contact with institutional lenders this year, yet only one-third of the builders had been approached by the same group. "CALPERS is the pioneer in home builder investment, and until the program shows some measure of success, I don't believe we will see other pension funds committing to investments in home building," said Lefferts.
 "San Francisco Bay Area builders were conservative yet optimistic in their estimates of when to expect an industry uptick," noted Lefferts. "Thirty-five percent said the turnaround would take two years, and 24 percent said it would come within a year."
 Kenneth Leventhal & Co. is the country's eighth largest accounting firm known for its expertise in real estate and financial services. The firm has offices in 14 cities and is affiliated internationally with Clark Kenneth Leventhal.
 -0- 11~17~92
 ~CONTACT: Karen Diehl of Casey & Sayre, 310-458-1224, for Kenneth Leventhal & Co.~


CO: Kenneth Leventhal & Co. ST: California IN: FIN SU:

LS-KJ -- LA007 -- 1774 11~17~92 11:00 EST
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Date:Nov 17, 1992
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