Housing market winners and losers
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Housing market winners and losers
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KAI RYSSDAL: The housing bubble hasn’t exactly popped, but it is losing a whole lot of air, especially in the Midwest. Sales of new homes in Chicago are already running 20 percent behind last year, and residential construction is down about 9 percent. Not so great if you want to sell your home, but for other housing industry players, there’s more of an upside than you might think. From Chicago, Diantha Parker reports
DIANTHA PARKER: Sick of stories about the housing market? You probably don’t own a house. But a downturn affects you, even if you rent, even if you live with your parents.
Every dollar spent on a new house is worth about $7 or $8 to the overall economy. That statistic brought to you by The National Association of Homebuilders. Mark Harrison heads up its Illinois chapter.
MARK HARRISON: The builder spends the dollar because he gets it from the customer. He turns around and he goes and buys the lumber package. And the lumber guy goes and buys more stock. The same is true as far as the plumber, the electrician.
Now look past this House-That-Jack-Built scenario and say that house isn’t built, isn’t bought. That means less of this stuff sells:
HARRISON: Carpet, furniture, draperies, silverware, new plates, housewares, gardening equipment, fertilizer . . .
And on and on. Between 1995 and 2000, Harrison says the number of people working in Chicago’s housing industry grew 26%, to an all time high of more than 400,000.
Now, construction companies are laying people off, unless they’re in the renovation and rehab business.
The Home Depot in Chicago’s Lincoln Park is bustling. This neighborhood was kinda seedy about 30 years ago. Now it’s one of the most fashionable and fast-growing areas in the city.
Sales associate Connie Pec says these days homeowners are all about a new bathroom.
CONNIE PEC: Whirlpool tubs are the hottest thing out there. Every contractor I’ve worked with, they do not put in regular tubs.
It’s because people are just staying put, instead of bothering with selling their homes and then buying again.
PEC: They look at the prices of what they’re wanting and it’s exorbitant so they can take home equity loans and all that, and actually go in and improve what their home is worth and be able to stay in a home that they’re very, very happy in, and that they’ve designed themselves.
This 4-year-old store was designed accordingly. Pec calls it frou-frou, but anyway, it’s less warehousey than other Home Depots and was built to appeal to non-contractors.
Pec says there was so much work going on the area this year, even in these lean times, Home Depot transferred her from another location to help professionals who were leaving empty handed.
We’ve already talked about the trickle-down effect that’s leaving many contractors without jobs to buy supplies for. But Alex Benjamin isn’t one of them. This week he was working in the homeowner Brian Lipson’s custom-built bathroom. Lipson points out, it was missing some of the built part, starting with the sinks.
BRIAN LIPSON: They just held them in with caulk. It’s a little like using like denture cream to hold in dentures, you know?
Lipson hired Benjamin to fix this and many other things.
Benjamin’s business is called Home Surgery and he’s shaped it so he’s not affected by either booms or busts in the industry.
ALEX BENJAMIN: I’m doing things that people need all the time, pretty much. It ranges from very small repairs to room renovations, and there’s just space for everything in between. A lot of my repeat customers come back to me with new things that they’ve discovered that need repairing or that they want to tweak or change in some significant way.
Benjamin isn’t the only contractor who does this kind of work. He says he’s done more jobs lately for people who figure all those small investments will make them comfortable in the short-term and make for a bigger return when and if they ever decide to sell.
In Chicago, I’m Diantha Parker for Marketplace Money.
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