OLYMPIA - South Sound builders are cautiously optimistic that a slowly improving economy will mean more business this year, although tighter lending standards, a glut of undeveloped lots and lower-than-expected appraisals pose challenges.
That was the sentiment shared Tuesday night by a panel of five residential and commercial builders at an Olympia Master Builders general membership meeting. About 75 people attended the two-hour meeting at the Indian Summer Golf & Country Club in Olympia.
Olympia Master Builders is a trade association that represents builders and remodelers throughout the region.
On the panel Tuesday night were Rob Rice of Gemini Corporation, Stuart Drebick of Adroit Contractors, Scott Bergford of Scott Homes, James Peterson of Lanza Premier Homes, and 2010 Olympia Master Builders president Ron Deering of Deering & Nelson.
The builders said 2009 was good but not great, and Deering said he had to adapt to the changing market by building more homes that cost less than $300,000.
It also was a year in which the issuance of single-family residential and multifamily building permits statewide fell nearly 50 percent from 2008. Total permits issued fell 46.5 percent to 12,381 through November 2009 from 23,162 in 2008, Building Industry Association of Washington spokeswoman Erin Shannon said Tuesday.
In Lacey, known for its home-building growth in recent years, the number of single-family residential building permits issued fell 12 percent to 298 in 2009 from 338 in 2008, according to Lacey Community Development data. Although the year-over-year decline was 12 percent, the 298 single-family permits issued last year were well off the pace of the 1,200 issued in 2006. Seventy-five percent fewer single-family building permits were issued in 2009 compared with 2006, the Lacey data show.
Although the builders hope business improves this year, expectations for 2010 varied among panel members.
Rice, a home builder, said lending will continue to be tight, and although the supply of homes for sale is falling, South Sound still has too many undeveloped lots that are putting downward pressure on values.
“Until we move through the glut of lots, it’s going to be tough out there,” he said.
Drebick, a commercial builder, said his outlook for the commercial market was poor. Last year was fine until the fourth quarter, he said.
“It’s really a strange time,” Drebick said. “Lack of customers is my biggest problem.”
He added that because the county’s economy is so closely tied to state government, it might not be until 2015 or 2016 that things start to improve for him, because by then state government will start growing again.
“If we’re all here in 2012, we’ve won,” Rice said.
Bucking the recent trend in housing has been Bergford’s Scott Homes. He told the audience that his niche of building “green” homes has made the past two years the best he has ever had. The new year also is off to a good start, he said. Still, Bergford took issue with lower-than-expected property appraisals, including one in which a recently completed $1 million home was appraised for about $600,000.
Peterson, too, said financing likely will be a challenge this year, but he also thinks the South Sound will see a slow uptick in building activity.
“It’s not going to get a lot worse,” Rice added about the market for building homes, “but it’s not going to get markedly better, either.”
Rolf Boone: 360-754-5403