Traverse City Record-Eagle

April 28, 2013

Builders finally see uptick in residential construction

BY KATHY GIBBONS kgibbons@record-eagle.com
Traverse City Record-Eagle

---- — TRAVERSE CITY — Antrim County residential builder Ed Porter would like to erase one year in particular from his memory.

“I hope I never go through another winter like 2009,” said Porter, owner of Porter Builders, which typically specializes in homes on Torch Lake. “It was very slow.”

So, for that matter, was 2010, and a good part of 2011.

“Trying to keep our guys working, that was something,” Porter said. “We’ve got 24 employees, all W2 employees.

“So we did anything. We were building whatever, and doing additions, remodels, whatever it took to wait for the market to turn.”

It finally seems to be. Home builders from around the region report brisk, growing business. And right now, Porter is a happy camper, after being forced at one point to lay off the equivalent of five positions and rotating layoffs among his workforce of two dozen.

“We’re very busy, thank God,” he said. “It’s been picking up gradually since, I guess, the end of 2011. We’ve had a tremendous increase this year. In fact, we just started three new homes.”

Optimism grows

Porter’s experience reflects state and national trends. The Home Builders Association of Michigan recently conducted a statewide survey that shows a strong surge in optimism among home builders and remodelers. Not only are builders seeing an increase in the number of consumers looking to construct homes in the $200,000 to $500,000 category, there’s also been a slight uptick in interest in the $500,000 to $800,000 range. That contrasts the stretch during the economic downturn, when most of the homes that sold were under $200,000.

Nationwide, U.S. home builders broke the 1 million mark in March for the first time since June 2008 – an increase of 7 percent in home starts from February, according to Commerce Department statistics. March’s pace of homes started was almost 46 percent higher than in the same month in 2012.

Factors include steady job growth, low mortgage rates and rising home values. With inventories of existing homes depleting, new construction is emerging to fill the gap.

“Basically, for the first time in about four years, my builders and subcontractors have smiles on their faces,” said Kathy Maisonville, executive officer for the Home Builders Association of the Grand Traverse Area. “They are backlogged with work.

“I have some that have reported they are booked spring, summer and into fall, and can’t even take on any more jobs.”

The Grand Traverse HBA itself took a hit during the economic downturn. It had 380 members in 2008 and 2009, but the roster is now at 280.

“I would say the majority – 85 percent – they’ve moved out of state, and many just left the industry,” Maisonville said. “I’ve had about a dozen members that merged with another member or another nonmember.”

During two years of lean times, some just dropped out of the association, she added.

“People were being more judicious with how they spent their money,” she said. “Oftentimes, our people, the last couple of years, (had to choose) – ‘Do I put fuel in the truck, food on the table or pay my membership dues?’”

Worth hanging on

Victor Lisabeth of Grand Bay Building and Remodeling in Traverse City held steady for the last four years, and said he’s recently brought on two new employees.

“I was down to myself, with subcontractors,” he said. “But we have a lot of different projects going on now. We’ve got three remodels, a carriage house and a new house.”

That last one, on Silver Lake, will be in this year’s Parade of Homes and is already sold.

In the last five years, Design Craft Homes in Traverse City built three new homes. Owner and President Scott Duensing said this year the company already is finishing one house and expects to start a couple of others.

Duensing’s company survived the recession by taking a “no-job-too-small” approach that meant smaller kitchen and bath remodels. Now the projects are growing in size and the number of customers.

“They want to start taking action on some remodeling they’ve been planning, and I’m talking to folks who want to do large additions,” he said. “The market is growing steadily. It’s not on fire, but by no means is it slow.”

Vacant land

Vacant land wasn't in particular demand in recent years, but sales will pick up as new construction expands, industry experts said.

“We would see things sit, depending on whether it was a residential subdivision that was new or undeveloped, for two to four years — that would be 2007 to 2009,” said Mike Schmidt, president of Coldwell Banker Schmidt Realtors. “All pieces of real estate before that had a lot of demand.”

Bob Brick, broker/owner of Remax Bayshore Properties in Traverse City, said about 3,500 listings exist for vacant residential property in the five-county Grand Traverse region.

“Usually vacant property, that’s the last portion of the real estate business to come back,” Brick said.

Sales aren't reflecting the same trend as home construction yet, but “We are beginning to see a substantial increase in search activity,” Brick said.

The Associated Press contributed to this article.