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Chinese drywall fears may slow Tampa housing rebound

Tribune file photo by JIM REED

At his townhome in Riverview, Bill Martineau has black spots appearing on mirrors and silver - a common problem from the gases emitted by Chinese drywall.

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By SHANNON BEHNKEN | The Tampa Tribune

Published: June 19, 2009

TAMPA - After a year of researching, Mary Ostien found her dream home. But she was afraid to buy — scared that the home could make her sick or turn into a financial disaster.

"I thought I had researched everything, but now I'm worried about Chinese drywall," Ostien said. "What happens if I buy the home now and find out years later that it has this drywall? And is it safe?"

Ostien decided to buy the Riverview home, but she included a clause in her contract that allows her to walk away if the bad drywall is discovered before the deal is final. She had an extensive home inspection that showed no problems. Even so, fears of the unknown linger.

Real estate experts say that kind of fear could further hurt the troubled real estate market at a time when sales are starting to rebound. Some buyers are avoiding newer homes, and sellers in neighborhoods with Chinese drywall are seeing their values plummet — even if their home doesn't have the tainted drywall.

At a time when experts are determining the magnitude of the nation's problem with drywall imported from China, Ostien's questions resonate with homebuyers, especially in Florida, where the majority of cases have been found.

"Any negative thing like this will impact the market," said Jack Rodriguez, president of the Greater Tampa Association of Realtors.

The Florida Department of Health has received more than 450 complaints from homeowners. Several federal agencies, including the U.S. Consumer Product Safety Commission, are investigating.

The drywall was used in as many as 100,000 homes across the nation during the housing boom and emits a corrosive gas that damages appliances, gives off a rotten-egg stench and may cause health problems.

U.S. builders typically use domestic drywall, but the aftermath of hurricanes, combined with growing demand during the housing boom, led to a drywall shortage. That prompted builders to turn to imported drywall, mainly between 2004 and 2007.

Builders say they didn't know about the bad drywall because subcontractors order it from distributors. Some builders have tracked down which shipments contained the Chinese drywall and are testing homes. Some have moved homeowners out and are replacing the drywall.

Meanwhile, class-action lawsuits against builders are mounting.

Experts are studying how the corrosive gas could affect peoples' health. Homeowners have complained of sore throats, dry eyes, nosebleeds and dizziness, and some say their doctors advised them to move out of their homes.

All this couldn't come at a worse time for Florida's real estate market, said Jack McCabe of McCabe Research and Consulting.

Of all the homes for sale statewide, a big chunk of them likely were built during the questionable time frame, he said.

Stigma remains

Many of those homes have been foreclosed on and are owned by lenders, who also are trying to sell. Lenders are going to have a tougher time unloading these homes, McCabe said. Additionally, more homeowners may turn the keys over to the lender so they don't have to deal with the drywall problem, he said.

"Even if you tear everything out, you can't remove the stigma," McCabe said. "And that stigma definitely affects pricing."

Sellers already are contending with plummeting values. The median sales price in the Tampa Bay area had fallen to $135,200 in April. At the peak of the local market in June 2006, the median sales price was $239,600. That's a decrease of almost 44 percent.

Bill Martineau, who lives in a Riverview townhome with Chinese drywall, says he's happy that the builder, MI Homes, agreed to replace the drywall, wiring and appliances. He's worried, however, about the home's value.

"People are still going to know there was Chinese drywall here," he said.

In the same community, Ken Lawrence, a real estate agent with Coldwell Banker, had to break the news to a client who wanted to buy a town home. During the homebuyer's second visit to the town house, they ran into building representatives who were testing for Chinese drywall.

"My client was devastated," he said. "She had really wanted to buy the home."

Tests can cost thousands

Michael Rowan, president of Jacksonville-based AmeriPro Inspection Corp., said his company is busy testing homes for Chinese drywall. Most of the calls for inspection, he said, come from real estate agents who want to ease fears for buyers.

The tests can cost thousands of dollars, he said, and it's sometimes difficult to persuade a seller to allow the tests — especially if they don't think they have a problem. Even so, Rowan said he strongly recommends buyers do at least some tests on any home built between 2004 and 2007.

"As a buyer, you almost have to do it because it's a major problem if you find the Chinese drywall later," he said.

The majority of the bad drywall came from the same manufacturers. The only way to know for certain whether the drywall contains the corrosive gases is to cut samples and send them to a lab. Each sample is typically about $500, and most homes require four to five samples, Rowan said.

"It's tough because most sellers don't want you to come in and cut holes in their walls," Rowan said. "We try to avoid that and take samples from inconspicuous places — such as the closet in the master bedroom."

How to safeguard your purchase

Before you buy a home built between 2004 and 2007, experts recommend you assess the house for Chinese drywall.

First, consider adding a clause in the sales contract that would cancel the deal if Chinese drywall is found before the closing.

Check for warning signs: corroded or black electrical wiring, tarnished metal or silver in the home, a rotten-egg smell.

Consider hiring a professional inspector for further testing. Initial consultations cost about $300.

If further testing is recommended, the inspector may want to cut samples and send them to test for the corrosive gas. It typically costs about $500 to test each sample, and most homes require four to five samples.

Source: Tribune research

Reporter Shannon Behnken can be reached at (813) 259-7804.

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