More Pain For Homebuilders: It’s Not Just Chinese Drywall That’s Bad

22 Apr

According to Housingwire, in a new report, investigators found that the problem we saw last year with homebuilders like Hovnanian using cheap, defective, and downright dangerous!

Nine of the 11 properties showed electrical corrosion including blackened copper wire and air conditioning evaporator coils. The five homes with problematic drywall exhibited “corroborating evidence,” such as sulfur build up, hydrogen sulfide emissions and copper sulfide development, synonymous with problem drywall.

While 11 homes may not seem statistically significant, the full report goes into greater detail, and after a cursory glance in the early AM hours, it seemed the methodology was fairly sound (although there are some caveats).  To absolutely no-one’s surprise, the majority of houses with reported problem drywall are in the south east, specifically in the bubbilicious Sunshine State:

The CPSC compared the homes in its most recent study to homes it previously surveyed. All homes were reported to have domestically produced drywall by the owners. Neither the CPSC nor EH&H independently confirmed the drywall was made in the United States.

As of Jan. 7, there were 3,770 incidents reported of defective drywall, according to the CPSC. Florida has the most with 2,137 cases, followed by Louisiana with 704 cases and Alabama with 215.

The report does not mention where these houses are by zip code or even better, by address, so we’ll need to do some more research as to which home-builders have the largest liability from domestically-produced problem drywall.  Strap in, this could be a helluva ride for some homebuilders…

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2 Responses to “More Pain For Homebuilders: It’s Not Just Chinese Drywall That’s Bad”

  1. Bob April 22, 2011 at 12:27 pm #

    Something else to consider is that during the slowdown from 08-11 when many developments were stalled for financing issues, these projects were often left open to the elements, sometimes on purpose. I know of at least 1 developer that purposely let his 3/4 built project that he was in default on begin to rot from mold due to rain getting inside the structure during a 1 year halt to construction. While he needed more money to finish the job (common), he [presumably] did this because his bank was beginning to market the note since they weren’t being paid. However, when investors came to tour the project, they found mold in the substructure as well as other issues so they lowballed the bank for the note. In any case, it worked! The developer got to renegotiate his loan and essentially bought back his own note. This, I’m told, has and is done all the time.
    How is this related to your post? My point is, don’t assume that stalled projects that end up being finished have been kept up to any standards of excellence to say the least. I’m betting that many projects built during the recession will be written about in the years to come for various quality issues that come up.

  2. River April 28, 2011 at 3:22 am #

    I’m impressed! You’ve managed the almost impsobslie.

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