Construction, hit hard by recession, starts to turn around
Posted: 09/08/2012 at 1:15 am
By: Justin Leighty
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Volunteer David Jester drives a nail as he works on the front of a Habitat For Humanity build on Center Street in Goshen Wednesday, Aug. 25, 2010. (Truth Photo By Jennifer Shephard)
Members of the Faith United Methodist youth group work with people from Builders of Hope to re-roof a home southeast of Elkhart on Aug. 2, 2010. (Truth Photo By J. Tyler Klassen)
John Foley of Foley’s Construction finishes the porch of Craig Pawling’s home. The home is a manufactured home that looks like a traditional stick-built house. (Truth Photo By Jennifer Shephard)
Tyler Tice (foreground) of the Faith United Methodist youth group staples roofing felt onto the roof of a home southeast of Elkhart on Aug. 2, 2010. Jeff Carter (rear) cuts roofing felt to fit around a vent. Carter works for Builders of Hope. (Truth Photo By J. Tyler Klassen)
Kate Suski (left front), Kayla Coleman (right front), Jessica Fry (left rear) and Miles Barrett (rear) carry bundles of shingles on the roof of a home southeast of Elkhart on Aug. 2, 2010. The four members of the Faith United Methodist youth group are working with Builders of Hope. (Truth Photo By J. Tyler Klassen)
Things are starting to look up this year, but there’s a long way to go before the numbers rebound to where they were before the recession.
Construction was humming along in 2005, with 1,142 permits issued countywide for new construction, mostly residential but also some commercial, according to information from the building departments for Elkhart County (which covers all towns) and the cities of Nappanee, Goshen and Elkhart.
Things started to cool in 2007, with 751 new permits, and in 2008, when the recession hit, that dropped to 409.
The following year, only 176 new construction permits were issued within Elkhart County.
In May 2011, when the county’s unemployment rate averaged 10.5 percent, it was 2 percent higher for construction workers, according to the U.S. Bureau of Labor Statistics. Those numbers are the most recent ones for the county’s industries. That year only 183 new-construction permits were issued.
Some of the construction was done by commercial builders, and some of it by groups like LaCasa and Habitat for Humanity, who kept going through the downturn, according to building departments.
Spending on all construction started to rebound last year, though, at least in the cities, with construction projects worth $75.2 million, according to the building departments. That was up from the 2009 low of $61.4 million. Contrast that with 2006, when the cities saw $154.4 million worth of construction.
The mix has changed over the last few years, too. In 2008, nearly half of construction was new, with the other half remodeling. Last year, less than 11 percent of the construction spending in the cities was for new construction, with the vast majority going toward remodeling.
“It’s been pretty significant. There were some very significant changes,” said Doug Wogoman of DJ Construction, a commercial builder. “Industrial projects kind of ground to a halt,” he said.
Doug Stuckey of Miller’s Building Supply said he saw a lot of builders downsize or even fold.
“Back in 2008 when it really hit, it hit hard and a lot of people were scrambling with what to do. They had to be creative and find different ways to keep business rolling,” he said.
With such drastic drops in the numbers, “that’s major. You just can’t support, as far as the companies out there,” Stuckey said.
While some builders had to close their doors, not many suppliers in the area have done so, Stuckey said.
One of the reasons is that at least some work continued.
“Once that initial dip stopped in new construction, I started getting a lot of calls,” said Jeremy Stutsman of Lofty Ideas, which focuses on remodeling work. Many people who thought about building a new home decided to wait and instead remodeled existing homes, Stutsman said.
Wogoman explained that as everything tightens up, “the market gets very competitive, too.”
Commercial building shifted to remodeling existing structures, but some additions and new buildings remained for strong customers, Wogoman said.
“Construction is probably as inexpensive as it’s been for a long time during this downturn. People took advantage of it, too. There wasn’t enough of it, though,” he said.
Despite the hard times, at DJ, “We did all right. We’ve kind of come through it stronger and, I think, more effective,” Wogoman said.
“We’ve seen more activity and projects in 2012,” he said. If not optimism, that at least shows some pent-up demand, Wogoman said, and he’s optimistic about the trend.
Stuckey said, “we’re definitely on an upward tick. This year it’s been good for us so far,” and he’s hearing the same from friends and competitors in the building supply industry.
At first there was concern that the upward numbers were just due to a really mild winter, but, “it just kept coming. It’s not like we’re breaking records, but we’ve had some months where we’ve had 25 percent increases over last year’s month,” Stuckey said.
“It seems like there’s a lot of estimating going on, and when you have a lot of estimating going on, that’s a good sign. It seems like the builders are more optimistic than they have been. We’ve still got a ways to go,” Stuckey said.