Maine contractors see housing growth in 2010

" Everybody's slow. It's not good right now," said Rodney Compo concerning the construction and remodeling market as he builds a handrail on a home on Union Street in Bangor on Monday, April 19, 2010. (Bangor Daily News/Kevin Bennett) Note: this goes with a Nick Sambides story slated for 4/24 Saturday.
Bangor Daily News | BDN
" Everybody's slow. It's not good right now," said Rodney Compo concerning the construction and remodeling market as he builds a handrail on a home on Union Street in Bangor on Monday, April 19, 2010. (Bangor Daily News/Kevin Bennett) Note: this goes with a Nick Sambides story slated for 4/24 Saturday.
By Nick Sambides Jr., BDN Staff
Posted April 23, 2010, at 7:57 p.m.

Mike Wood says his home-building business, Woods of Maine Inc., is chugging along.

This week the affordable-housing contractor has crews building eight new homes in Bangor — four apiece at Whispering Meadow Subdivision on Grandview Avenue and at Lyons Ledge Subdivision on Ohio Street, he said.

The typically three-bedroom, two-bathroom houses will sell for $119,900 to $169,900, Wood said. With the spring building season just getting under way and 24 houses sold already, Wood expects to build and sell many more than the 27 new dwellings he transacted in 2009, he said.

“On Lyons Ledge, I have 11 houses sold, and on Whispering Meadow, I have 10 that are under contract,” Wood said Thursday. “Business is booming for us right now.”

Wood’s family-owned-and-run business, which also includes Woods Homes LLC of Bangor, might be the exception this year, housing construction industry observers say. Although they see new housing construction starts climbing through 2010 from the dungeon the recession and housing industry collapse had consigned them to, it will be a slow climb.

“I do think that we are in early stages of recovery. I do not predict a recovery in 2010, but I do see slow upward growth for our builders and suppliers,” said Gary Jordan Jr., state president of the Homebuilders and Remodelers Association of Maine, a group of 280 homebuilders, remodelers, subcontractors and housing industry suppliers.

“For the last two or three years, it was gloom and doom. That’s what we heard: gloom and doom, and builders and associates going out of business. We’re not hearing that this year,” Jordan said. “What we do hear is that the people right now that choose to build are taking advantage of two things — low interest rates and builder deals.

“Builders want business. Remodelers need business. They are taking advantage of the deals these people are doing,” Jordan added.

Nationally, housing starts rose for a third consecutive month in March to a seasonally adjusted annual rate of 626,000 units, according to U.S. Commerce Department statistics. The rate of permit issuance for new housing construction also rose by a solid 7.5 percent in the month to a seasonally adjusted annual rate of 685,000 units.

Single-family starts slipped 0.9 percent in March, but the decline — from an upwardly revised number the previous month — was due to a drop-off in the Midwest from an abnormally high February level; all other regions reported single-family gains in March. Nationwide multifamily starts gained 18.8 percent to a 95,000-unit rate for the month.

In Maine, the housing market collapse was huge and might be best seen in the building permit data collected annually by the U.S. Census Bureau, said Dan Simpson, manager of the Maine Housing Authority public information office.

In 2005, the state issued 8,075 building permits; in 2009, permits plummeted to 2,520.

“Last year was dead. We were chasing little, small jobs and odds and ends all year. We didn’t have any sizable projects,” said Larry Ham, owner of Larry Ham Construction of Lincoln, “and a lot of people were trying to bid for the few jobs that were out there. We didn’t build a whole house at all last year.”

So far this year, Ham said his company is about to start a remodeling job on a house in East Millinocket and is awaiting bank financing on a new home construction in Lincoln.

“I guess I have been telling everybody I am cautiously optimistic,” Ham said. “Compared to last year, we’re way ahead in terms of inquiries. People at least are talking about projects.”

Randy Sinclair, owner of Sinclair Builders Inc. of Ellsworth, said that he, too, feels business picking up. He signed a contract last Friday to build a home in Ellsworth, his first this year. He built three new homes last year. Usually, his 20-worker business is constantly working, building at least one a month.

“We are optimistic. It’s been a slow 30 months,” Sinclair said. “We are just now starting to see people show some interest in building homes. We are actually pricing out a number of homes right now. We are focusing on having a half-decent year.”

Jordan predicts that though gains in new housing starts might be slight in Maine this year, home remodeling will likely increase as homeowners who might have bought new start renovating the old.

“What people are doing right now is a lot of green technology,” Jordan said. “People are very energy conscious. In an economy like this, people wake up to that [savings] really quick.”

Ham said that while his housing business fell off, he has found a lot of commercial construction work in Lincoln — so much so that he wonders whether people erroneously believe that he’s no longer building new houses.

Federal programs that give first-time home buyers an $8,000 tax credit and second-time buyers $6,500, have helped spur new housing starts, Wood said. Though he had no hard data on it, Wood said he felt that banks also were starting to lend money a little more.

“I think people are getting a little bit more comfortable about spending money,” Wood said. “I think the Wall Street scare is kind of over, out of people’s minds a little bit. Money is getting a little bit freer.”

Emily Shaw, a 24-year-old Bangor resident, said she and her husband Richard, a 23-year-old insurance salesman, decided to build a raised colonial in the Whispering Meadows subdivision. They liked Wood’s price, $148,000, felt economically secure and wanted to grab the $8,000 first-time homebuyer credit.

“We used to talk about the possibility of buying a [house in] foreclosure and flipping it, but we realized that you can buy a home for so affordable a price and brand-new and not have to worry about a leaky roof or anything,” Shaw said. “This is the right time for us. We have a second child coming in June.”

Wood broke ground in February, and in early April the Shaws moved in, she said.

“We just feel confident in home buying,” Shaw said. “We know that we can turn around and sell it in four or five years, when the market improves, and make a profit.”

Like the Shaws, people who do build are likely to look for a moderate price. They also might build smaller, Sinclair said. New homes built three years ago in Ellsworth were big enough to sell for $250,000 to $350,000. New houses selling now in his area move in the very low $200,000 range, he said.

The more affordable new houses, which his businesses specialize in, always sell first, Wood said. He predicted that more expensive new housing wouldn’t move much this year.

“If you can keep a house for below $189,900, you can sell houses all day,” Wood said. “If you sell a house for above that, you can plan on sitting on it for awhile.”

http://bangordailynews.com/2010/04/23/business/maine-contractors-see-housing-growth-in-2010/ printed on April 16, 2014