Home builders suffer hard blow to wallets

"You do what you have to do to survive,'' says one.

By LOGAN NEILL, Times Staff Writer
Published July 29, 2007

The view from a garage under construction in the Spring Ridge subdivision of Brooksville on Thursday afternoon.
	[Julia Kumari Drapkin | Times]

ADVERTISEMENT [Julia Kumari Drapkin | Times] Juan Ruiz, right, checks the master plans of a house under construction in the Spring Ridge subdivision in Brooksville as Renee Jiminez, center, and Pablo Hidalgo, left, take measurements. Those in the construction industry say survival is tough going this year.

Alan Osborne has never seen it so bad.

Not too long ago, the Spring Hill framing contractor had so much work that he had to hire three or four extra crews to handle the load.

These days, Osborne says he's lucky to find enough work to keep him and his sons, Kevin and Michael, busy. In fact, his company, AKO Framing, hasn't had a local job in more than three months. Instead, he and his sons have been traveling to Mississippi to work for a contractor friend building a strip mall near Biloxi.

"It's not much fun doing all that traveling," Osborne said. "But you do what you have to do to survive."

Surviving in Hernando County's current residential construction market makes for tough going for those who earn their paychecks from it. According to figures from the Hernando County Development Department, just 513 single-family home-construction permits were issued during the first six months of this year -- a 73 percent decrease from the same period in 2006. The drop-off shows that the jittery housing market has yet to see significant signs of recovery.

People in the industry blame the precipitous drop on a number of factors, including skyrocketing insurance rates and taxes, which have plagued homeowners around the state. But county development director Grant Tolbert believes much of the cool-off is simply the result of a large number of unsold homes in the county.

"The construction industry is suffering from too much of a good thing," Tolbert said. "During the boom, things were crazy. Now we have a huge house inventory, and, until it starts moving, new construction will probably stay slack."

According to the Hernando County Association of Realtors, 160 home sales were recorded in the county during the first half of the year. About 4,100 more remain on the market.

Harry Willett, president of Realty World-Willett and Associates of Spring Hill and outgoing president of the Realtors group, sees the ongoing slump as the result of an overzealous construction industry that benefited from a record 4,271 new-home permits issued in Hernando during 2005. Another 2,787 were issued last year.

"What prompted it was low interest rates and a market where people could turn a quick dollar," Willett said. "Interest rates are still good, but the number of people willing to invest in homes isn't there. Fears over rising taxes and higher insurance rates have them looking elsewhere."

Willett says high-end homes, as well as those priced below $150,000, seem to be faring better in the present market than moderately priced homes because few buyers see homes in the middle price range as potential investments.

"There are a lot of them moderately priced homes out there," Willett said. "I'd say that anyone looking for a good deal should wait six months and see what's around. There will be some good deals."

Although the slump is affecting nearly all parts of the construction trade, Tolbert said commercial contractors are enjoying some success as businesses continue to open near newer subdivisions.

However, Tolbert said, small residential contractors that build fewer than 25 homes a year are apt to feel the pinch because few have the deep pockets that would allow them to sit on an unsold house for a long period of time.

Custom home builder and Hernando Builders Association vice president Dudley Hampton Jr. said that small builders like him have been forced to be creative in order to keep their businesses afloat. His company, BJH Construction in Ridge Manor, has tried to stay busy with room additions and remodeling jobs, work he might not take on in more prosperous times.

Still, Hampton says he knows of several smaller contractors who suddenly found themselves unable to weather the drought. Hampton, who has been in the construction business for more than 30 years, says experienced builders are more apt to prepare themselves for such slowdowns.

"It's cyclical," Hampton said. "It's bad right now, but it will get better. Until then, you look for every opportunity so you can to pay the bills and not lose your good employees. If it means pounding the pavement, that's what you do."

Alan Osborne is hopeful that things will improve soon -- not just for him, but for his sons, who will succeed him in his framing business. For now, he watches his finances carefully and has learned to do without. Plans for a vacation trip to celebrate his 40th wedding anniversary had to be scrapped. And he and his wife, Kathleen, plan to drive their current vehicles until they wear out.

"I try to keep a positive outlook," Osborne said. "But I can tell you, it's gotten to the point that I hate seeing the first of the month."

Logan Neill can be reached at lneill@sptimes.com or (352) 848-1435.

Building permits (January-June)

2007: 513

2006: 1,929

Source: Hernando County Development Department

Annual building permits

2007: 513 (through June 30)

2006: 2,787, down 35 percent from 2005

2005: 4,271

-73%

decrease from 2006 to 2007

Fast Facts:

Month-by-month

The number of building permits that have been issued this year in Hernando County:

January: 149

February: 78

March: 67

April: 64

May: 77

June: 78

Total: 513

Source: Hernando County Development Department

[Last modified July 28, 2007, 22:05:51]