At the height of the housing boom a couple of years ago,
Hawthorne electrician Scott Lacz had five employees, most of them
working on new construction. They were so busy they often put in
hours on Saturdays and Sundays,
”
doing what we had to do,
”
Lacz said.
At the height of the housing boom a couple of years ago, Hawthorne electrician Scott Lacz had five employees, most of them working on new construction. They were so busy they often put in hours on Saturdays and Sundays, “doing what we had to do,” Lacz said.
But when construction began to sputter about 18 months ago, Lacz had to lay off two workers and shift his attention to renovations and repairs. There’s no more weekend work.
“New construction is dead,” he said. “There’s nothing really going on.”
Facing a steep downturn in demand for new housing, builders and subcontractors like Lacz are scrambling for home repair and renovation work to stay afloat. And they can’t depend on construction hiring to pick up any time soon. Most analysts say the industry won’t revive until 2009 at the earliest. Recent surveys of builders by the National Association of Home Builders found them in a deeply discouraged mood.
The National Association of Home Builders predicts housing starts nationally to be around 1 million this year, down dramatically from about 2 million a year in both 2004 and 2005. This translates into declining employment in the building trades.
“It’s a difficult time,” said Bernard Markstein, a senior economist with the National Association of Home Builders. He said builders are cutting costs, laying off workers, discounting their prices and diversifying into other lines of business – such as building strip malls or small office buildings – to survive.
Some won’t make it. Kara Homes, an East Brunswick, N.J.-based company that built all over the state, filed for bankruptcy in late 2006. Other builders, according to Markstein, will simply sell off their inventory and stop building new homes for a while, until demand picks up. Many will do more remodeling work in the meantime.
“There’s an old joke – in the good times, contractors become builders and builders become developers. And in the bad times, it goes in reverse,” Markstein said.
Frank Conforti of Conforti Plumbing, Heating and Cooling in Fair Lawn, N.J., became a builder during the last boom. A plumber who did a lot of work for high-end builders, he bought a house with a partner a couple of years ago. They tore down the house, divided the lot and built a colonial on one side.
“The market was going really well, and we saw an opportunity,” he said. They put the new house on the market in 2006 for $689,000. Though the price has been cut to $629,000, it’s still on the market.
If it doesn’t sell this spring, Conforti said, he and his partner may have to cut the price again “or maybe rent it out till things go back up a little bit.” In the meantime, like other contractors, he is also doing more remodeling and repair work.
For Lacz, 43, the downturn brings back memories of 1991, when he started his business, right in the teeth of a serious housing downturn and economic recession. This feels worse.
“In 1991, I was single, just starting out, so it really didn’t bother me too much,” he said. But now he has three children. “It affects me a little more now than it did then.”
