Archive for Sunday, January 27, 2008

Building bust

Construction slowdown forces area builders to redirect energy

January 27, 2008

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Home construction numbers down

Lawrence is coming off its slowest year for home construction since the Reagan administration. Enlarge video

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.

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."

Comments

Keith 7 years, 2 months ago

What's the problem, Jack won't hire an out of town plumber?

KS 7 years, 2 months ago

This town is overbuilt. Period. The builders want to use illegal immigrants and complain that if they don't, they won't make it. Prices in this town are up to 40% higher than for the same home in Topeka. Same cost for materials, lumber, etc., just higher prices for the same end product. I guess if you want to build apartments in Lawrence, there seems to be a great demand. What does that say? For all the folks that work in Topeka, you can buy a home for less there and not have to commute (with toll, etc.) every day. Hum!

moveforward 7 years, 2 months ago

You're a class act 458casul. At least Jack can spell.

Michael Capra 7 years, 2 months ago

jack hope please,who wants to hire a guy that drives to your house in a porsch.He dosent know what a hammer looks like, he would hurt himself if he put a tool belt on

Richard Heckler 7 years, 2 months ago

Lawrence needs a new industry. For instance Kansas does not need more energy necessarily just a cleaner source which will require skilled workers who are willing to be trained in a new area of light industrial. New energy is necessary throughout the state. Installation of solar into existing homes might be a trade to consider.

One example: "JCCC also has a strong and growing commitment to sustainability, and needs to develop more programs that would give opportunities for people to work in green industries. In turn, that workforce base should be a good incentive for new businesses

to move here. A concrete example: There is a developing shortage of technicians for wind turbine construction and maintenance, and those are well-paying jobs. Cloud County Community College already has a program.

We should too. As I am brainstorming, this would also be a great opportunity to work with Haskell, perhaps through the HERS Center."

The above information came though my email.

The sub prime problem in addition to millions of USA white collar positions slated for outsourcing to India will only compound the situation across the board.

Fishman 7 years, 2 months ago

Replying to 458casul Âjack hope please,who wants to hire a guy that drives to your house in a porsch.He dosent know what a hammer looks like, he would hurt himself if he put a tool belt onÂ

I know Jack but not well, but I do know that the Porshe that he drives you are talking about is either from the 60Â's or 70Â's, and isnÂ't exactly what youÂ'd call mint condition. Most likely the car you drive cost more than the Porshe he has.

mommy3 7 years, 2 months ago

They act like just anyone one who decided to buy a house, can buy a house. They have made it so hard for ordinary people to get loans. I have friends with GOOD credit, and a 20% down payment....they can't get a loan.

Richard Heckler 7 years, 2 months ago

Our personal experience with Jack Hope who at the time was connected to Natural Breeze was that a crew of Lawrence craftsmen would show up and provide a quality finished product. Jack did monitor our project closely.

The Lawrence market appears to be flooded in rental properties and retail as well. It seems as if a flooded market reduces property values.

With all due respect Mr. Durflinger taxpayers may want to consider how much more are they are willing pay in additional costs of community services before adding new neighborhoods to our bedroom community.

Costs such as this "short" list indicate: Additional city staffing and equipment water and sewer lines streets and repairs houses public schools fire stations law enforcement manpower sidewalks snow removal bike trails and cross walks Traffic signals Traffic calming Strip Malls Expensive Flood Control

*In general increases the cost of community services to all taxpayers = increased taxes and fees

Also Mr. Durflinger you may have contributed to making a mockery of our election process: Developers Emergency Party by First Management http://www2.ljworld.com/news/2007/mar...

Mr. Durflinger I always felt you as a planning commissioner truly constituted a real conflict of interest. I've never understood why you supposedly led the effort to remove economic impact/analysis from the planning commission approval process of new projects. Economic Impact Analysis perhaps should be mandated till the end of time.

ASBESTOS 7 years, 2 months ago

Jack Hope was one of the few guys that would actually look at the asbestos and lead issues in a house, at least when I worked with him.

Overbuilding, sub-prime loans (whom D's and R's both passed a law allowing them in 1994), illegal alien labor, and speculatin that real estate would always increase in value at 15% per year.

These are unreal expectations and iellgal activities, and UNCOUND ECONOMIC JUDGEMENT!

THis contry and culture both conservative and progressive want strip malls, retail outlets, and resturaunts. Really economic savvy people want production, and infrastructure developement. Our society and culture is retail consumerism.

WE build no grand infrastructure, our bridges are rotting as we speak, and cannot hamdle the load of this so called "progress" and "growth" of endless retail outlets and suburbs.

jayhawklawrence 7 years, 2 months ago

Merrill says: Lawrence needs a new industry. For instance Kansas does not need more energy necessarily just a cleaner source which will require skilled workers who are willing to be trained in a new area of light industrial. New energy is necessary throughout the state. Installation of solar into existing homes might be a trade to consider.

I agree with Merrill and wish there was even more dialogue in this direction. I have personally toured factories across the country for the last 25 years and I can tell you they are not going to fold up and go away. In fact, manufacturing is going through a mini boom right now despite Chinese competition. You will need manufacturing to build the environmental products of the future and you will need mechanical engineers, etc. to design them.

I am a firm believer that a major component of a successful economy is the ability to design and produce new products. You also have to have the ability to manufacture. There is a synergy that exists between design and production. They work together, meaning you cannot lose your ability to manufacture if you want to grow over the long term.

I don't see a lot of growth for Lawrence in the future without adding more manufacturing in this area and the ability to attract talented people to the area and retain the talent we have. I see a lot of people leaving over the next 10 years as the cost of living (taxes) and housing costs rise.

Linda Hanney 7 years, 2 months ago

As I drive into Lawrence from the west, it appears all homes in the area look alike. In the process of house hunting with family members, they do indeed all look alike even in the inside. Our house hunters purchased a home with personality and location in an area outside of Lawrence for nearly the same amount of money as one of the cookie cutter homes. As in the case of the Junction City building boom the thought seems to be the builder who gets the most units on the market first wins, no matter the design or quality. As the LJW article indicates, maybe it's time for builders to step back and study their buying market.

Richard Heckler 7 years, 2 months ago

"I have friends with GOOD credit, and a 20% down payment:.they can't get a loan."

Soooo the system destroyed the rule of thumb that prevailed for 50-60 years....very interesting. Perhaps our financial wizards are concerned about the impact their irresponsible behavior may be creating in the job market. Sprint and major financial institutions are laying off tens of thousands. The USA and Lawrence have no idea what the level of impact may be now that white collars are being outsourced.

The booming green industry is one area our community and state should be pursuing. Business Week noted education is another area that is still a substantial player in hard times and good times.

BigPrune 7 years, 2 months ago

People like this Merrill's way of thinking is why this town has been going down hill for the past 8 years. You've all the apartments Lawrence has ever needed, and that's it.

City Hall is filled with raging socialists and closet communists. Performance based employment would be better for them, then they could grasp the REAL world. Why hasn't City government decreased in size since there isn't anything going on here anymore? Why hasn't City Hall reflected the reality THEY created?

Socialism and Communism are failed philosophies and the City of Lawrence government needs to stop trying to emulate these failed concepts.

jonny_quest 7 years, 2 months ago

Several more realtors and home builders will cease operations in Lawrence in the next few years. The local and national circumstances are now such that this is only the beginning of a significant step-change in the real estate market that Lawrence has never experienced.

It's been 30 years in the making, but the demand to live in a highly taxed bedroom community of overbuilt, overpriced properties with a crumbling infrastructure, sliding school rankings and low paying local jobs will continue to spiral downward for several years.

Dorothy Hoyt-Reed 7 years, 2 months ago

I think what most people aren't getting from this article is that the recession has begun, and this is one of the local impacts. Everyone must be creative and flexible to survive our modern swings in economy. You never know when you have to find other ways to make a living.

alfie 7 years, 2 months ago

who are some of the better builders in lawrence?

moveforward 7 years, 2 months ago

The fed has spent the last 15 years afraid to let the market determine its own destiny. Our housing market has been artificially bloated for that period. Now, instead of multiple small corrections over time, we will endure one large correction. Housing and development have been the crutch of the American economy for many years. For those that calculate their net worth based upon their house in US dollars, it will be a sad awakening.

ASBESTOS 7 years, 2 months ago

"For those that calculate their net worth based upon their house in US dollars, it will be a sad awakening."

That is an affirmative!

moveforward 7 years, 2 months ago

And, for the record... Jack is a fine person that makes substantial and much needed contributions to this community outside of his construction work. He seems to have many happy customers in the community. What the h3ll difference does his choice of car matter?

jayhawklawrence 7 years, 2 months ago

My experience is the the best companies tend to stay in areas where they begin. Therefore, we need to make it easier for small businesses to get started. The idea of attracting large established businesses obviously means you start going to the tax incentives and competing with everybody in the country. We've got two problems here that are big obstacles...a transportation bottleneck from K-10 through Lawrence and a severe lack of industrial space. Unfortunately, we have not been able to solve these problems to date.

Michael Capra 7 years, 2 months ago

jack helped us get to no growth when he supported the rundle bundle gang

sdinges 7 years, 2 months ago

femail: "As I drive into Lawrence from the west, it appears all homes in the area look alike. In the process of house hunting with family members, they do indeed all look alike even in the inside."

I live in one of these beige houses. Not only do they look alike, inside and out, and have no personality, but many of them are actually of poor quality. Our builder quite obviously pursued a "race to the bottom" mentality in terms of costs, even while the market was healthy and headed into a boom. As a result, when you buy one of these beige palaces, you can also expect to invest a good deal of money in replacing the cheap or badly-installed items within.

Michael Capra 7 years, 2 months ago

cool / michael almond froot loops and soft brains

toefungus 7 years, 2 months ago

For too long the house has represented a lifestyle instead of a home. A lifestyle should be about how we choose to behave, not what we consume. On an economic note, the reason homes are not selling is they are overpriced for the available buyers. Banks loose credit standards fueled a buying frenzy that the market responded to by increasing the size and cost of the average home. It may take several years for the market to settle. Stocks correct quickly because trades occur frequently. Houses trade slowly and correct slowly.

BrianR 7 years, 2 months ago

Beigeville anyone?

We always called them "Benderville" because if you were on a bender, you'd never know which one was yours.

lunacydetector 7 years, 2 months ago

isn't Made_In_China related to the people who sold a big chunk of land to mcgrew for all those 'beigeville' houses in southwest lawrence?

the city of lawrence is the problem. they are more restrictive now than they were when the three stooges were in power - it is a carryover mentality from the stooges' reign. i hope and pray the new city commission will drop the hammer down on some of the people who work at city hall and make lawrence less restrictive. if nothing is done, lawrence will go down hill even more than it is today.

alfie 7 years, 2 months ago

Believe it or not but the building slowdown that the city caused save some of the builders and the economy here, slowing it down ahead of time

alfie 7 years, 2 months ago

Who are the better "Builders" in Lawrence?

alfie 7 years, 2 months ago

Which Builder built your home, and are you happy with the outcome?

rumor_man 7 years, 2 months ago

It's too bad that Sven aka Cool never graduated from architecture school.

Newell_Post 7 years, 2 months ago

Some states allow non-degreed people to take the architectural license exam based on 8 or more years of apprenticeship working under a licensed architect. That's a somewhat old-fashioned formula, but it's still on the books in some states.

Jerri Johnson 7 years, 2 months ago

Perhaps the reason Jack Hope is having such a hard time is because he doesn't pay his subcontractors. My company did work for him over a year ago and we've yet to get paid in full. It makes me sick to listen to him whinning whe he has knowingly created so much hardship for others.

toefungus 7 years, 2 months ago

Not paying subs. It happens all the time, but it is a despicable practice. If you want to know about a builder, ask subs.

rumor_man 7 years, 2 months ago

Sven aka Cool,

It says here that you graduated from KU in 1975.

http://www.dreamgreenhomes.com/aboutus/profiles.htm

Is this true? Yes or no.

Thanks, Rumor_Man

TheObserver 7 years, 2 months ago

Jack Hope's business problems are more the fault of Jack Hope than a building bust in Lawrence's economy. Ask anyone who's had stuff built by him - his people did great work, but there was a large gulf between that reality and whatever came out of Jack's mouth, and the company fell into that abyss...................

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