Builders still building new homes, but at slower pace

The new home construction business isn't all "gloom and doom," says one homebuilder.

  "We'll make it through this," Scott Spencer, manager of TDG, said of the current slow market.

  In fact, he said, while he isn't as busy as he was in 2004 and 2005, he's still building and selling houses.

  "We're still busy," he said, adding that he expects to sell more than 100 new homes this year.

  Other builders are considerably less optimistic about their year-end sales.

  Bobby Kammann, head of Kammann Development, said he expects to build 40 homes this year, versus 200 in 2005 and 2006.

  "I expect most of the builders are in the same situation," he said.

  Robert Schaffer, owner of Quality Development, has sold 43 new homes so far this year and is hopeful he will sell another 20 by the end of year.

  The three agreed that the homes that are selling are in the lower price ranges from $150,000 to about $250,000, low enough that buyers could qualify for a FHA loan.

  A look at the number of building permits issued by the city of Yuma for single family homes reflects the builders' experiences.

  So far this year, the city has issued a total of 215 house permits - only six in October, said Alan Kircher, assistant building official.

  The year's total so far is in line with the number of permits issued 10 years ago, before the big run-up in home building activity that began in 2000 and peaked at more than 1,000 new homes in 2005. In the last several years, the 12-month totals for new single-family houses in the city of Yuma were:

  • 2007 - 240 permits

  • 2006 - 699 permits

  • 2005 - 1,018 permits

  • 2004 - 940 permits

  • 2003 - 685 permits

  • 2002 - 570 permits

  • 2001 - 576 permits

  • 2000 - 462 permits

  • 1999 - 270 permits

  • 1998 - 211 permits.

  Spencer attributes his success during a slow market to a "great team of people," all of them from the subcontractors to the lenders cutting costs where they can while still maintaining a quality product.

  He's been busiest with three projects: Arroyo de Fortuna in the Foothills that has been popular with winter visitors, Estrella and The Terraces at the View. He is starting a new subdivision, Araby Crossing, that he also expects to do well.

  "I can't think of a better time to build a house," he said, with the interest rate below 7 percent and lowered prices.
 He also believes Yuma is a better position than many other cities.

  "I think the reason we didn't get pummeled as badly as other places like Phoenix is because we didn't have the big national builders so we didn't have the vast amount of inventory on the market," he said. "That's a huge advantage for us."

  Besides, he said, "there's something about this town. It's solid. And we still have people who want to build houses."

  That still has builders cautious about building on speculation.

  "We're building as we sell them," Kammann said. "We're just trying to make deals. We've cut overhead and sold things, sometimes at a loss, and laid off people. We're just trying to make the bank payment and keep people working."

  But while activity is slow, he said, he thinks it isn't quite as bad as in 1981 and 1982 when interest rates of 17
percent brought the real estate market to a halt.

  "We went nearly a year without selling," he said. "It was bad. But we were a small company then."

  Schaffer feels blessed he's keeping as busy as he is and attributes that to the success of Lynnwood, a new subdivision on 12th Street between Avenue C and D where he's getting ready to start on the second phase. He believes the relative success is because of the price and the many upgrades offered as standard features.