Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Sunday, August 06, 2006

Construction Industry Getting Pounded



"The construction industry, a major economic engine in Sonoma County, is scaling back home building as the housing market loses steam. Just last week, Christopherson announced plans to lay off 18 percent of its work force in response to the slowdown."

"Overall, local construction companies have eliminated 600 jobs since the building boom peaked last October. Analysts warn there could be more job cuts ahead in the construction sector, which directly supports 14,500 jobs, or 7 percent of Sonoma County's work force."

"In Sonoma County, construction activity began to sink three months ago. Builders pulled 841 permits to put up homes and apartments in the first six months, down 46 percent from a year ago, when builders got permits for 1,545 homes and apartments. It was the weakest six-month pace since 1996, when 612 residential units were built during the same period."

"Housing starts fell to a 10-year low in Sonoma County through the first half of this year as builders delay construction plans and cut prices. Some builders predict activity will pick up this fall and construction will approach normal levels seen before the housing boom ignited the market."

"Even so, the slowdown this spring and summer marks a dramatic turnaround from last fall, when builders were constructing new homes at the fastest pace in six years."

"The velocity of sales has slowed. We haven't put a new foundation in the ground for a couple of months," said George Casey, chief executive officer of Christopherson Homes, the county's largest home builders."

"Permit drops have led to construction job losses in every housing downturn, said Ryan Ratcliff, an economist with the UCLA Anderson Forecast."Usually you see permits turn and then six to nine months later you see construction employment start to turn," Ratcliff said."

"The housing sector is feeling the impact of the Federal Reserve's two-year campaign to fight inflation by boosting interest rates. Rising interest rates are making homes more expensive and pushing more buyers out of the market."

"To boost sales, builders are pricing below what they would have asked a year ago or delaying new housing starts and holding prices on what remains."We're pricing for the market," said Frank Denney, vice president of operations for Cobblestone Homes in Santa Rosa."

'"It's weaker than it was last year. There are still buyers looking. There are just not as many and they're not as aggressive."Christopherson Homes is selling and building homes at half the pace of a year ago."

"KB Home and Standard Pacific Homes, two of the nation's largest home builders, have launch- ed projects in the county."We are really excited to be building in Sonoma County and Petaluma. We're confident in the market up there," said Craig LeMessurier, spokesman for KB Home."

"KB Home hasn't built in the county for a decade, while Standard Pacific has never built in Sonoma County.Standard Pacific believes its homes should sell well despite the housing slowdown."

2 Comments:

At 8/06/2006 06:54:00 PM , Anonymous tom stone said...

i would have a real good home inspector go through any home built in the last three years before i'd consider buying it at any price.does anyone know what's happening with the new condo's in santa rosa and petaluma? are any of them offering woodstock figures or other classy incentives?

 
At 8/09/2006 12:16:00 PM , Anonymous Anonymous said...

Does this mean construction contractors will be cutting their prices in another year or two? I have a termite-damaged deck that needs replacing...

 

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