Housing slump affects local industries
Local contractors and builders are shifting their work strategies to soften the impact the ongoing slump in the California housing market has had on the region’s building trades.
Their efforts have not been uniformly successful.
Realtors are not the only ones suffering from the slipping demand for new homes. A wide variety of business owners and workers in the housing market’s companion industries, including construction, home design, material supply and tourism, are also noticing an economic down turn.
To intercept the tumbling economy, the construction industry is looking to reinvigorate the Tahoe-Truckee market for remodeling.
“The fact is that you can find a contractor and get materials for less,” said Tony Reid, president of Truckee Tahoe Lumber Company.
Lumber prices are at a 15-year low, driven by the dropping demand for building materials nationwide, Reid said. And contractors are eager and anxious for work.
President Mark Tanner of the Contractors Association of Truckee Tahoe said he often receives “three phone calls a day” from contractors and foremen who are looking for work ” people who are “very reputable.” He has also been contacted by architects searching for jobs.
“Three years ago, everyone was so busy and their pricing was accordingly,” Tanner said. “Now, to some degree, people are willing to take work just to make ends meat.”
The board of directors for the Contractors Association of Truckee Tahoe voted Monday to steer the industry toward remodeling by promoting home improvement to property owners and offering guidance to builders during the new-home construction slowdown, said association Executive Director Pat Davison.
The association is no longer looking at new-home construction as “the one and only egg in the basket,” Davison said. “I think you’re going to hear that message from us in this next year.”
The change is a reaction to the recent drop in the housing sales and prices. A leery home-buying public has left unsold homes on the market and contractors without work.
It’s the homes built on speculation without a guaranteed buyer that are hurting the region’s builders the most, Tanner said. Several spec-home contractors have stopped new construction altogether because the market is so congested, he said.
“Not only has that put a burden on [the contractors], but it’s put a burden on suppliers and vendors and everyone across the board,” he said.
While the housing slump devastated the market in Reno and Sacramento, business owners said the nationwide drop affected the Truckee-Tahoe market later than the initial hit.
The region’s predominant clientele, mostly second- and third-homeowners, were less affected by the foreclosures and high interest rates, Tanner said. But the unstable market still does not promote faith in purchasing a home right now.
“I think people are a little hesitant to all of a sudden do that custom home that they’ve always dreamed of having, because the market is tight right now,” Tanner said.
The housing slump’s pronounced ripple-effect has been felt well beyond construction, all the way to home planning, material supply and even home cleaning.
“It’s just something I know because of the balance in the checkbook and the amount of effort going out to generate business,” said Mike Bernard of Mountain Home Design.
Bernard said he’s readjusted his budget to allocate more money to marketing his business. But despite investments in radio advertising, Bernard said customer inquiries are declining.
“Back in 2004 and 2005, we didn’t need to do anything. Business was pouring out the door,” he said. “Now we’re knocking on doors to advertise this company.”
In 2005, Bernard said he had 33 jobs. So far this year, the general contracting firm has had just 11 clients.
Reid said lumber revenues at Tahoe Truckee Lumber Company are down, with framing lumber down 40 percent from three years ago. But business in the company’s kitchen and bathroom departments is up, he said.
Paz Knoke, owner of A Clean Sweep, said her home-cleaning company has seen a surge in business from foreclosed homes that are being prepared for sale. Since September, Knoke has cleaned nine foreclosed homes.
“It’s good but it’s bad, because we can see the hardship of the families,” Knoke said. “We can see that people just got up and left.”