The Housing Crisis Hits Home

By Mark Bevis on Thursday, January 17, 2008.

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Governor Lynch this week told state lawmakers that he's worried about the state's economy.

The interest and dividends tax revenues are predicted to run about 10 million dollars short because of the economic slowdown. And the nation's housing crisis could cause revenue from the real estate transfer tax to be down by about 15 million dollars.

But as NHPR's Mark Bevis reports, problems in the housing market are affecting more than just the state's budget.

The New Hampshire Association of Realtors reports that nearly 98 hundred homes are currently sitting on the market waiting for a buyer.
That’s a 14 month supply.
With so many houses waiting to sell, it’s not surprising that new homebuilding is down.
And Kendall Buck says housing starts are way down.
Buck is with the New Hampshire Homebuilders and Remodelers Association.
The latest data that I have in front of me is October, but it hasn’t changed much thru December. We were 23% at the end of Oct below 2006 October, year over year.
Much of that drop is happening in the middle income homes market.
But the higher end market seems to be taking a hit too.
John Ela is the President and CEO of Epoch Homes in Pembroke.
His company custom makes modular homes for people who can build a home when they want it.
He says his sales are down 25%.
Tape: I think the whole industry is in kind of a survival mode.
He points to one of his competitors, Customized Structures, in Claremont, which closed its doors with little or no warning just days before Christmas.
Ela says he too has had to lay people off.
Mostly it’s been thru attrition but we’ve had a few layoffs and we’ve also had some rolling layoffs, where we may be waiting for that next house to get released to production so we might have a week here and week there.
If builders aren’t building, suppliers can’t sell supplies.
Jim Rand’s a partner in the Rand Lumber Company in Rye and he says business is down 10 to 20%.
We’re in the same boat as just about lumber supplier. We’re you know just trying to keep everybody working.
The nearly 100 year old business has been through tough times before and he expects to weather this crisis too.
But Rand says just about all the contractors who come into the yard have the same complaints.
They’re slow, they don’t have any work ahead of them. Typically four or five years ago, these guys had work booked a year or two ahead of time, they were just seven days a week and couldn’t get any time off.
Those complaints are familiar to Dan Trott.
He’s the office manager for Andy’s Carpentry Company in Nashua.
From what Trott can tell, only part of the problem is the lack of new housing starts.
His company does a lot of remodeling work.
And he hears customers say they’re more worried about the economy in general.
A lot of people have been saving for a new kitchen or a new bathroom or something. They have the money but they’re leery of spending it because they’re unsecure on their jobs.
As a result, Trott says, his business is down about 60 to 70 %.
This time last year, we were booked until July, right now we’re booked until the end of next month.
He too has had to lay people off.
There is a bright side to all this though.
The state’s economy is still pretty strong and the unemployment rate is less than 4%.
Russ Thibeault, President of Applied Economic Research says fortunately the commercial building sector is still going strong.
Things like hospitals are expanding. We’re still seeing some additions in the retail sector, new stores coming in, restaurants. But those tend to be larger firms, so it’s not an even hit. The small homebuilders the small contractors are taking a bigger hit.
And says Thibeault, while others have compared this housing slowdown to the dark days of the early 90’s, this time it’s different.
Even in the construction industry, there were fewer jobs during the good years than in 1989, 88 for example. Since we didn’t get as crazy on the upside, we won’t get as much pain on the downside.
Still says Thibeault, it’s the high paying bread winner jobs that the state is losing.
The same kind that the state is losing in the manufacturing sector.
It used to be the strong construction sector offset job losses in manufacturing,
Now, the state is losing both.
For NHPR News, I’m Mark Bevis.