If there's one good piece of news for Georgia builders about the downturn in the market, it's that the state's water crisis isn't having much of an effect on them. Faced with a 100-year drought and less than a three-month supply of water in metro Atlanta's major reservoir, Georgians are being hit with significant watering restrictions. Some counties in the Atlanta area have taken the step of shutting off the water of residents who violate the total outdoor watering ban and charging them $1,000 to turn the water back on.

Gov. Sonny Perdue has declared a state of emergency and on Wednesday ordered state agencies to reduce water use by 10 percent. That included a ban on installing new landscaping at state facilities and on washing state-owned vehicles.

Perdue is still awaiting word on two federal requests for relief. On Oct. 19, he filed suit in federal court, asking for an injunction to prevent the U.S. Army Corps of Engineers from releasing more than a billion gallons of water a day from Lake Lanier, the primary source of water for 3 million residents. Under federal law, the Corps releases the water downstream to Alabama and Florida to protect the habitats of endangered species of mussels and sturgeon. No date has yet been set for a hearing.

At the same time, Perdue has asked President Bush to declare northern Georgia a major disaster area, which would trigger federal assistance and give the state an exemption from the Endangered Species Act.

"We have had good and productive meetings with the White House and the president's chief of staff," says Marshall Guest, the governor's deputy press secretary. "While we like it to be approved today, we know it could take upwards of a month."

That doesn't sit well with Ed Phillips, executive vice president of the Home Builders Association of Georgia.

"We've asked for help now for two weeks, and we've had inactivity," he says. "The federal government took a lot of heat with respect to Katrina; here's a disaster in the making in multiple states, and they're sitting back once again, watching it happen. When we put mussels and sturgeon ahead of people, we have a problem."

Under normal market conditions, the widespread restrictions would have created significant problems for area builders, but with fewer housing starts, they aren't feeling a major pinch as of yet, Phillips says. Like everyone else, they're foregoing watering the landscaping around sales centers and model homes, and the yards of their inventory homes are just as brown as everyone else's.

"From an appearance point, it hurts," says Mike Coggin, owner of Douglasville, Ga.-based Kensington Home Builders and past president of the Home Builders Association of Douglas County. "We can't keep the grass or plants alive. Fast forward six or seven months, and there's a possible moratorium on building because of the drought. I don't know if they would grandfather in existing neighborhoods."

Reports of builders receiving certificates of occupancy without sodding lawns fueled concerns about erosion control once it does start raining again. "Trying to keep silt out of the rivers and ponds takes on new meaning with a drought like this," says Don Brock, Atlanta division president of HomeLife Communities, the Atlanta market's third-largest home builder. "We're dealing with dust control. You have to go in and wet the dirt down to keep it from blowing all over the place."

Brock points out that new homes use far less water than older houses. Code changes over the years have resulted in new houses being built with 1.5 gallon-flush toilets, and low-flow shower heads and faucets.

Until the drought is over, builders are hanging in there, cutting back where they can and hoping for rain, like everyone else in the state.

"We're all in this together," Brock says. "We're just girding our loins. It's just one more dadgum thing to worry about."

Learn more about markets featured in this article: Atlanta, GA.