Building bust

Construction slowdown forces area builders to redirect energy

Gria Inc. crew members Brent Wallis, of Lawrence, left, and Michael Camacho, of Kansas City, Mo., sand walls and install wood trim on a remodeling project at 1650 Cambridge Road. A Lawrence company, Gria is staying busy even in a construction downturn by concentrating its design firm, fabrication shop and construction company on a broad range of projects, including custom homes and remodeling.

Jack Hope leads an enterprise that specializes in home construction, remodeling and designs for residential projects in the Lawrence area.

In name, anyway.

“I’m down to one employee,” said Hope, owner of Jack Hope Design Build, which had 17 employees just two years ago. “I’ve reduced the size of my company down to me.”

Hope is far from alone in watching his business fortunes decline along with the overall construction market in town – a segment that slowed last year to its slowest pace since midway through the Reagan administration.

The city issued 166 permits for construction of single-family homes in 2007, down by a third from 247 a year earlier – and the fewest since 163 permits went to builders in 1985.

The economic effects of the slowdown are considerable, said Bobbie Flory, executive director of the Lawrence Home Builders Association. She estimates that construction pumped $26.5 million into the local economy last year, down from $45.4 million a year earlier.

Perhaps more telling: the home work accommodated 471 local jobs in 2007, down from 1,279 in 2006.

“There are a lot of people affected, in addition to the builder,” Flory said. “That’s one less job for the plumber. That’s one less job for the mechanical contractor. That’s one less job to have carpet purchased for, and on down the line.”

Reflective approach

Builders are finding that they have time to step back and assess their operations, consider other opportunities and brush up on changes in building codes and other relatively mundane matters.

“It’s allowing time to be reflective, if there’s a positive side to this,” Flory said.

Hope is working to retain optimism, despite having to respond to the downturn by closing his cabinet shop, selling his equipment and letting all his employees go. He’s keeping busy by drawing up plans for residential remodeling projects, but even then, potential clients increasingly balk at the expected price tag or otherwise line up competitive bids from increasing numbers of ever-hungry contractors.

After more than 20 years in the business, Hope is mulling options outside his business for work.

“You have to re-create yourself,” Hope said. “You have to re-create yourself now. That’s the only way to survive.”

Optional approaches

Some builders have gotten out of the business. Others have worked to focus on landing custom jobs, where paychecks more or less are guaranteed. Still others, like Hope, are concentrating on remodeling jobs – both commercial and residential – which last year recorded more permits than at any time since 2000.

One builder has parked a Harley-Davidson motorcycle in the garage of one of his homes, including it with the home in hopes of spurring a sale. Lawrence Landscape branched out into pool projects, to help fill the hole in residential work.

Eric Hodge, of Keystone Homes, landed work as project manager for Fairfax Bluffs, a commercial project in Kansas City, Kan., that he’s been on for the past six months.

“With the lull in demand right now, it’s really starting to ripple out and affect a lot of people,” he said. “Home builders are slow. Mortgage bankers are slow. Suppliers are slow. It’s starting to become a bigger deal.

“We’ve been blessed with brisk activity for the past 20 years, but the pendulum is bound to swing back the other way eventually. We’re seeing that now.”

Sid Ziegler, owner of Ziegler Corp. and president-elect for the home builders association, said that many association members were falling back on projects that may have been on the back burner during previous periods of active home construction. Some builders are focusing on rental properties, or even coming up with lease-to-own arrangements for select properties.

He figures that enough new homes are already on the market to meet demand for the next year, at current rates. Then again, he said, today’s inventory might not have lasted three months during the market’s height in 2004.

Waiting to rush

“It’s going to have to be a promising season this year before people are going to get back into it,” he said. “They’re going to have to see some product disappear off the shelf – and see some demand – before they’re going to rush to build again.”

Ron Durflinger, owner of Durflinger Homes, said that he’s planning only for two new homes in the immediate future. While he has no expectations for a “dramatic reversal,” he’s hoping that falling interest rates might help spur renewed interest in buying new homes.

Then construction can pick up once again.

“This horse has been beaten bloody,” Durflinger said. “People need to wake up and answer for themselves this question: Do you believe that the value of a roof over your head – and the quality of life that comes with it – will no longer be a viable alternative for Americans? If your answer is ‘yes,’ then the sky is falling.

“If you answer ‘no,’ then go out and run the numbers, and you will find it’s an excellent time to make an investment.”