Homebuilders struggle

By Bob Stuart

Published: July 21, 2008

New home construction in the Valley and Virginia is dragging to a standstill, and the prognosis for the remainder of this year and next is bleak, builders and economists said Monday.
“There is a complete stop, almost, on construction,” Waynesboro builder/Realtor Rick Kane of Westhills Co. Builders said. “People are renovating or remodeling.”
A recent study by the Thomas Jefferson Institute for Public Policy predicts that single-family home building permits in Virginia will decline 19.4 percent in 2008 and 10.4 percent in 2009.
That trend is reflected in Augusta County, which issued just 12 permits for single-family homes and six for townhouses in June.
“In an average year, we would have 30 to 35 houses. We are way down,” Augusta County Chief Building Inspector Mike Nickell said.
The housing slowdown, among other things, will be a likely topic at 7 tonight when the Republican committees of Staunton and Augusta County gather for an economic forum at the Augusta County Government Center.
Instead of building new homes, Nickell said, many people are opting to build additions.
Builders are approaching the market with caution, Kane said.
“They have got it sold before it is built,” he said.
That has led to increased competition from builders for companies such as Home Innovations, a Fishersville home renovation business, company President Brian Mininger said.
Homeowners doing renovations or additions are owners “who have been in the home 15 to 20 years. They have built up equity and they are taking advantage,” Mininger said.
People interested in a new home increasingly are seeking multiple bids from contractors, Kane said.
The dramatic rise in gas prices has played a part, slowing the exodus of people from Charlottesville to Waynesboro, Kane said. Lower home prices here in recent years had drawn buyers over the mountain.
Gas prices also have driven up construction costs.
“We are seeing fuel surcharges. A lot of suppliers are putting the surcharges on our bills,” Kane said.
Nickell said the sluggish market has changed the mentality of local contractors.
“Five years ago, they would laugh at remodeling,” he said. “Now, builders are falling back on remodeling.”
The outlook is brighter for those seeking to sell an existing home.
Staunton Realtor Debbie Shickel said it is still difficult for first-time home buyers to afford a house. Home sales are still steady for Shickel, she said.
“The market in our area is similar to before the hot market,” she said. “Homes are still selling, but they must be priced right.”

If you go
WHAT: Forum on the local economy sponsored by the Republican committees of Staunton and Augusta County
WHEN: 7 tonight
WHERE: The Augusta County Government Center
SPEAKERS: John Meade, of First Bank & Trust; Del. Chris Saxman, who is affiliated with Shenandoah Valley Water Company; Scott Sayre, owner of Sayre Enterprises; Matt Fitzgerald, of Urban Design Associates