Luczak Group - The Blog

Information for happenings in the Real Estate Market in the Pikes Peak Region... and some things we just find interesting!

Tips for Home Buyers

Home construction industry experiencing turnaround after several years of decline

A decade ago, the housing industry was booming. Nationally, millions of new homes were going up each year.

But around 2006, a slump began that only now is starting to subside.

The U.S. Commerce Department last week put the seasonally adjusted annual rate of housing starts at 523,000, a number that is low compared to the boom — but up from data posted earlier in the year.

Local builders said they are seeing signs that things are turning around.

Ken Moe, president of the Home Builders Association of Jackson board, said there seems to be more confidence in the state economy.

“There is work out there,” Moe said. “We all have projects.”

In another indication things are turning around, Moe said the group will bring back its Parade of Homes in August, which will feature new and remodeled homes.

The annual event had been canceled in past years because of the economy and lack of new homes built.

Mike McKay, who owns M-R Builder Inc., 6624 Brooklyn Road, said that when times were good, he was building eight to 10 homes a year.

That dropped off to none for one year, and then went through a stretch where he was building only one or two new homes annually.

But his company is in the process of building three new homes right now, two of which are in Jackson County.

He said there has been a nice increase in clients calling and requesting quotes. The trick has been the clients finding the financing.

McKay said several deals have fallen through in the past two years because banks refused to loan the money.

“It seemed like a lot of banks closed their doors for a while,” he said. “But that appears to be loosening up.”

Mike Scholl, president of Mike Scholl Builders Inc., 6740 Carter Road, said as interest in new homes dropped off, he kept busy by doing more renovations and additions.

His crew specializes in concrete resurfacing, and has found that to be a successful venture when they aren’t building new homes.

Since people found they couldn’t sell their home or didn’t have the money to build a new home, they invested in their current home to make it more appealing, he said.

“It’s a good time to buy a house right now, but not if you have to sell one to buy one,” Scholl said.

Andy Woell, president of General Materials, 2995 Brooklyn Road, said he is seeing more contractors coming in with orders to fill. And that’s good for his business because 80 percent of the sales are with professional contractors.

“There is an upswing is new residential construction and the remodeling industry,” Woell said.

And not only are there more orders, but the size of the projects are bigger than they were a year ago, he said.

Where many of the orders were for home maintenance projects such as fixing a leaky roof or replacing windows, now contractors are coming in with orders for additions to homes or major renovations.

“Now it seems to be more wants than needs,” he said.

Randy Baker, president of R. L. Baker Construction, 184 Cannes Circle in Brooklyn, is in the process of building his second new home this year.

Twice in the past few years he went 18 months straight without building a new home.

“The difficult part is we’re still competing with foreclosures in terms of appraisal value,” he said.

The number of foreclosure properties make it harder for people looking for a loan to get enough to cover the cost of the home unless they can come up with a 20 to 30 percent down payment.

So to make ends meet, he moved from the office he was renting in Brooklyn and back into a room in his house.

“We’ve had to be more efficient,” he said.

When he bids on new projects, he has to keep his bids low, which also decreases the profit margin.

“But you have to have work to keep people employed,” he said. “We want to keep our people working.”