I work for a subcontractor who focuses on the custom home market, which here is dominated by wealthy retirees and people with multiple homes. Almost all the building permits issued this year for new residential construction went to Centex Homes, whose local single family tract homes begin at 199,900 with an advertised monthly payment of $1,344.47.
That places them in the lowest price category for the local home builders annual Parade of Home show, but beyond the reach of most of our workers who, if they make $20 an hour, can’t afford to spend half their net income on housing.
Only one building permit, so far, has gone to a luxury home builder. And the last I heard, some of the biggest winners in this year’s parade, still have no offers.
When I read Ford Motor’s marketing executive Ken Czubay’s comment that the uptick he saw in demand for F series pickup trucks was due to more sales to contractors, I wondered about his logic. The only companies I see here getting work are the ones expanding the road twenty miles north of town and the two general contractors are headquartered a hundred miles to the south of here.
Some heavy equipment operators and bridge builders will be buying new trucks, and possibly some may be able to buy something from Centex, but nothing will trickle up to us.
John McAfee, who recently sold his 157-acre rural estate in New Mexico for $1.15 million, is the extreme example of our market: he was worth more than most of our customers, more than $100 million, and lost more, some $96 million. That sale price, incidentally, is the mid-range for the local home builders show, and less than the asking price for some of this year’s big winners.
Most of our past customers weren’t in McAfee’s tax bracket, but like him, they saw their investments wither this past winter. This spring, when we were called to do our annual work, it turned out not to be the usual exterior maintenance, but the final preparation to put homes on the market. Their experiences only humanized what we already knew. No one was building and few were buying.
A year ago, we regularly worked for maybe nine contractors, two small ones who are basically gone, two medium size ones that are holding on with remodels and no subcontractors, and five high-end builders. Of those, two have no business, and have laid off most of highly skilled crews who made their reputations. Two are surviving by demanding we do the same level work we did in the past for less money. The other is using another subcontractor, and has been replaced in our list by someone else who’s still getting work. We have less than one-third the number of steady customers we did a year ago, and one third the number of employees.
A few weeks ago when we were called to do emergency work in a home after a plumbing leak, we called another subcontractor only to find he and his crew had gone to Colorado to work. There were no craftsmen left in town skilled enough to do the restoration work, so my boss was the one who did the work himself. The insurance company, however, only allows the standard billing rate for a journeyman, not a master craftsman.
A few days ago I asked one of our contractors about Czubay’s observation on contractors. He snorted, and said there was no paper anywhere in town, meaning no one was drawing or bidding blueprints. He said he had recently taken a set of drawings into a copy shop and felt like he’d entered a nest of vultures - all the contractors and subcontractors there started surreptitiously eyeing them to see who was the architect, who had business.
As he said, until the local architects stop laying people off, there’s no recovery here. It doesn’t matter what New York or Detroit thinks.
Notes:
See posting for 9/13 on "Cash for Clunkers" for more on Ken Czubay.
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