Building is slow
0BPermits sink, but local tide could turn
September 29, 2011
By Vic Bradshaw
The
Justin Ashlock (left),
site supervisor for Kee Construction, and mason subcontractor Mike Chavez look
over blueprints Monday at a single-family home the company is building near
White Hall in
(Photo by Ginger Perry/The
building permit issued
to KEE Construction is displayed at the construction site.
(Photo by Ginger Perry/The
Officials in
Housing starts in 2011 could be lower still.
Officials report only 114 residential building permits being issued in
Frederick County through Aug. 31, along with 24 in Winchester and 15 in Clarke
County - a pace that would yield only 230 such permits for the year.
The effects of the bursting of the local
housing bubble show in the membership of the Top of Virginia Building
Association (TVBA).
Danny McKee, the organization's president,
said membership peaked at 180 in 2007. By 2009, membership had plummeted to 50,
though a recent drive has pushed the count to 110.
"I'm sure we lost a lot of builders who
went out of business," said McKee, president of operations for
The recent recession was dubbed a
"mancession" by some because a disproportionate number of men lost
their jobs. Construction was one of the big losers, and many in that industry
remain out of work locally.
"The first sector we saw being impacted
by the recession in 2007-08 was construction, and it will probably be the last
sector we see going back," said Gene Schultz, manager of the local
Virginia Employment Commission office. "The market was so hot in the early
part of the decade, and then it just stopped."
Schultz said he thinks the number of
construction workers who have moved into other industries during the downturn
is "relatively small."
Where some see only gloom in the housing
industry, however, Dave Holliday sees opportunity.
Holliday, owner of Dave Holliday Construction
and founding president of the TVBA, said that while the housing market remains
in a funk nationally, he thinks it's poised for growth in areas such as
He points to a low regional unemployment
rate, low interest rates, low local tax rates, proximity to
"I have not built a house in eight
years," Holliday said, "and I'm getting ready to start seven. You've
got to find the right price point, you've got to find the right product line,
you've got to find the right location.
"I think there's a pent-up market, but
that will change dramatically when these things straighten out."
The missing ingredient for the local housing
market, Holliday said, is consumer confidence. Potential area homeowners are
scared when they see national headlines about the homes-sales season being the
worst in 50 years, but they miss the positive signs about the market.
In June, real estate industry analyst Inman
News Service declared the Winchester Metropolitan Statistical Area (MSA) the
second best place in the country to buy an investment home, behind only
The report stated that home values in the
local market are expected to appreciate 62.7 percent over the next decade, and
return on investment for a house is projected to be 270.7 percent.
Then in July, the region was selected by AARP
The Magazine as one of the best bargains for retirees.
"Real estate is a local commodity,"
Holliday said. "What's happening here is not necessarily what's happening
in
While some home builders might have gone out
of business, McKee said many downsized or sought work in
"They've diversified their
business," he said, "doing decks and smaller-sized projects, home
improvements or renovations."
To reflect the new construction reality,
McKee said the building association's Parade of Homes, set for Oct. 20, 22 and
23, will feature a new category for judging - outdoor living. It will provide
companies a chance to showcase their deck and hardscape work.
McKee and brothers Kenny and Tim formed KEE
Construction in 2005, at the height of the local building boom. The company,
Danny McKee said, was fortunate to get enough work done before the decline to
develop a good reputation, and about 70 percent of its work now is repeat or
referral business.
The company, which employs 35 people,
provides an array of construction services. Recent projects include a deck on
the Carrabba's Italian Grill that opened recently in Kernstown Commons.
Sales were flat in 2008 and 2009, he said,
but they rose about 20 percent last year and are on that pace again this year.
KEE recently started or finished four homes - not a lot, but considerably
better than 2009, when none were built.
Lori Fountain still operates Fountain Homes,
but she no longer depends on construction for her livelihood. In April, she
took a job as retail coordinator for Valley Health.
Fountain said she founded the company in 2000
and built four to five custom homes a year at the peak. She finished just one
custom home this year, though, and is building a spec house to sell.
"Because I kept my business so small, I
think if I had wanted to continue building I could have kept running Fountain
Homes as I did with maybe one employee, a superintendent," said Fountain,
the TVBA's president in 2010. "But watching the economy and all the
unpredictability that's here, it didn't seem like the best use of my time and
best career opportunity for me."
Fountain, 42, said the Valley Health job was
not a fallback. Instead, it enabled her to use her education and experience and
was "the best choice to give me potential for future growth."
Holliday, 62, has been in construction since
1971 and said he's used to seeing industry dips every five to seven years, with
recovery taking two-and-a-half years. He hasn't seen a falloff this bad - six
years and counting by his estimate - but thinks the overbuilt market has
contributed to the slow rebound.
New housing grew so rapidly from 2002 to 2005
that a crash was inevitable, he contends.
"The market," he said, "was
too hot."
But that's not the case anymore, so Holliday
has broken ground on a home in
"You will never, for the rest of your
life, build a house as inexpensively as you can right now," he reasoned,
"so why not do it?"