Budget season squeezes private builders on how much risk to carry

For many private homebuilding company principals, CEOs and senior operators, the next six to eight weeks may be the gauntlet, through strategic budgeting season, that triggers the nearest thing to flashbacks to the Great Financial Crisis.Not because structural demand for new homes is MIA. Nor necessarily because their businesses are on the brinkMany aren’t. Some entered this stretch with conservative leverage, disciplined land positions, strong banking relationships, valuable local franchises and operating teams that have been through enough cycles to change course nimbly and ably.The problem is that several pressures that homebuilders can ordinarily shoulder one at a time are now bearing down at once.Orders are slowing. Mortgage rates remain high enough to keep otherwise qualified buyers on the sidelines. Consumers don’t merely question whether they can afford today’s monthly payment; many also question whether their job, income and the value of the home they’re considering buying will be as secure six or 12 months from now.Meanwhile, finished homes need to move. Incentives erode gross margin. Older land carries a basis set in a bygone demand environment, when order pace was bette...