Industry Suffers in Dismal US Housing Market
September 2, 2011
In 2010, about 323,000 new homes were
sold in the United States. That’s the worst year on record since 1963.
The dismal housing market in the United States, flooded with abandoned
properties and foreclosures, has forced many out of the home
construction industry. The building suppliers and construction workers
who remain in the U.S. Midwest are trying to deal with the worst
economic environment their industry has seen in decades.
Builder Hal Stembridge started his construction business in 1979, during
a recession, when interest rates were high and fewer new homes were
constructed. Nothing he learned then could prepare him for what he’s
dealing with now. “People say that it’s a recession when your neighbor
gets laid off, it’s a depression when you get laid off, well this is
just devastation," he said. "This is just coming out and wiping
everybody in the trades… it’s just wiping everybody out.”
Stembridge is one of the few home builders in suburban Chicago still
actively seeking the few customers who want to build new homes. He is
fighting to say afloat, and directs some of his anger at the government.
“They’ve bailed out the banks. They’ve bailed out Wall Street. They’ve
bailed out the car companies. But the largest employer in the United
States is still suffering and that’s homebuilding,” Stembridge noted.
About 54,000 new homes were built in the Chicago area in 2005. So far
this year, only about 3,000 building permits have been issued to start
construction on new housing.
Brandon Weiss got into the new home construction business at the height
of the boom. Now in the bust, he is surviving by retooling. “But kind of
as the market dissipated in new construction, we had to find other ways
and alternative measures of making ourselves relevant today. So we
definitely went into remodeling as kind of a focus point for a while.
We’re still there,” he stated.
Weiss purchased his recent remodeling project in a foreclosure. Now
completely renovated, this house is one of the most energy-efficient
homes on the market in Elgin, Illinois. It’s still for sale. “It’s tough
right now. Showings are really slow. But I think that’s just market
wide, not specifically on this house. It’s just the market in general
The dismal housing market has a ripple effect all the way up the supply
chain to independent retailers like the Edward Hines Lumber Company.
“Hines at their peak was at 27 locations," he explained. We’re down to
Doug Jones is the President of Hines Lumber. “At the high point of
Hines, they had over 1,200 employees. We’re a little over 100,” Jones
Jones says the low point for Hines in 2008 was 60 employees, but hiring
has picked up, thanks to new investment in the company.
Jones’s small, independent building supply company still competes with
bigger retail stores and other small suppliers for the business that
remains. “The new home construction, at least in Chicago, is down over
90 percent from where it was in 2007. So there are still enough
suppliers out there but not enough people building homes. It just makes
it tough. There’s not enough to keep them going,” he said.
Builder Stembridge says there would be enough to keep them going if the
government stepped in to help. “The bottom line is each new home
provides three jobs for one year in the U.S. and creates about $90,000
in tax revenue. I don’t understand why the government doesn’t get behind
new home construction [and help them get] back up on its feet,” he
Even interest rates at record lows (below five percent) have not
encouraged people to buy or build new homes. And with unemployment rate
in the U.S. at over nine percent, potential buyers are concerned about
their jobs, and whether or not they can afford the mortgage that comes
with home ownership.