Builders adjust to slower times

Buyer's market prevails in Flathead County

Flathead County's first-quarter housing starts are down 44 percent from last year and are down 53 percent from the 2004-07 average.

But some local builders foresee a turnaround for the construction industry.

In spite of the current downturn, Flathead leads the state with 100 housing starts in the first three months of 2008. Nearly all of the state's most populous counties posted declines in housing starts ranging from 20 percent to 48 percent.

The shrinking number of housing starts is part of a three-year trend in the Flathead. (See chart for more details.)

Separate numbers for Kalispell weren't available, but senior planner Sean Conrad said the building department hasn't been as inundated as it has been in the past.

"Houses are going up, but definitely not as quick," Conrad said. "We're down from previous years, but we're still way up."

Local builders are feeling the crunch.

"There is definitely a slowdown happening," said Merna Terry of Ron Terry Construction. "It's a tough one."

Terry, the government affairs chairwoman for the Flathead Building Association, said the construction firm she and her husband operate will stop building houses that aren't pre-sold.

Builders throughout the valley likely will do the same.

"A lot of builders have stopped building spec homes," she said. "There will be less homes on the market, and that will create more demand."

Terry said the Flathead home-building situation has been affected by the national economy, the national media and a longer winter here in the valley.

"People are a little bit afraid and thinking if they wait they'll get a better deal," Terry said.

Better deals on new homes are part of what Terry calls a positive outcome of the housing boom's reduction.

"This is a good time to buy," she said. "It's a buyer's market. Prices are down; interest rates are low. People are going to get a good deal right now. But it's going to change, though."

With the prime building season just around the corner and a housing stimulus package working its way through Congress, Terry said the housing lull may be short-lived.

In early April, the House Ways and Means Committee approved a bill offering a temporary $7,500 tax credit for first-time home buyers. If buyers regain enough confidence to invest money in a home - coupled with lower prices and low interest rates - the Flathead Valley could again experience a storm of construction.

Terry said the tax credit, better weather and the upcoming elections could jump-start building again.

"This is the time to do it, especially for a long-term investment," she said. "All of a sudden, people will have missed the lull. People want to live here, and they need homes. Once it starts, it's going to be more of a demand than supply for a little while."

Local staffing agencies vary on their reports, but the general trend is that construction job opportunities are down, which has in turned caused the unemployment rate to rise.

"It's definitely been slower this year," said Laura Gardner of the Flathead Onestop Workforce Center. "We probably had one of our slowest winters in quite a few years. Our hope is that it's going to pick up and do well. Time will tell."

Large developers - both commercial and residential - appear to believe that Flathead County will weather the storm and come out on top. Commercial construction activity is still strong, and large residential developments such as Silverbrook Estates are moving full-steam ahead.

Sliverbrook Estates is along U.S. 93 North and recently received final plat approval for 107 lots on the first 73-acre segment, which means the lots are available for immediate construction. Lot prices start at $129,000.

Developer Howard Mann said he has 26 lots already sold and is "absolutely" optimistic about the market.

"I think the generic-lot subdivisions are going to have a slower time," Mann said. "The upper-end lots are continuing to sell. The people who are buying those, price really doesn't matter. They aren't looking for a bargain."

Mann, who was a developer in Las Vegas, said the housing-market woes sweeping the nation have not hit the Flathead as severely.

"Las Vegas, Phoenix and Florida have been decimated," he said. "People in Las Vegas were buying homes so fast the builders jacked up the prices and it got to an unsustainable level. Something had to happen. When the price of a house doubles in five years, you know something is wrong."

Mann said that a lot of people think the housing market has bottomed out and a recovery is near.

"You've got to have a product that people want when the market turns around," he said.

Reporter Michael Richeson may be reached at 758-4459 or by e-mail at mricheson@dailyinterlake.com