Anyone who still wonders just how severely the recession has hit the housing industry needs to look no further than the NAHB, whose membership of single-family builders last year fell by 30% from 2008 levels, according to an in-depth profile of this builder group that the association released early this month.
That profile also shows minimal activity among these builders last year in condo, co-op and age-restricted housing construction, as each of these sectors has been overbuilt in many areas of the country and has been slower to recover from the recession.
In 2009, NAHB estimates that it had 31,630 builder members that build single-family houses. That number was down from 45,198 members the previous year. To keep their heads above water, most of its members were tackling other kinds of projects besides single-family construction: for example, 45% did residential remodeling, and 15% said they did land development.
It’s no secret that the recession has caused many builders to cut back on manpower substantially. More than half of NAHB’s membership was operating last year with four or fewer construction employees; about one-quarter had only one construction employee. When administrative and sales people are included, NAHB’s membership averaged 7.5 workers.
Indeed, as has long been the case, NAHB is an association of small builders. Its report shows that nearly three-quarters of its membership built 10 or fewer single-family homes in 2009. The average number of single-family homes built throughout NAHB’s total membership was 17 units in 2009. The median dollar volume these members generated from construction last year was $1.36 million per company; only 14% of its membership generated $5 million or more in revenue in 2009.
“Single-family,” for NAHB’s purposes of calculation, includes townhouses, although the association does not break out its members by their construction of attached and detached product. However, its report found that only 4% of its single-family builder members also build for-sale condominiums or cooperatives, and another 2% also build multifamily rental units. Its members built, on average, only two multifamily units last year.
While these percentages are lower than what its builder members typically engaged in during better economic times, David Crowe, NAHB’s chief economist, says he doesn’t see anything particularly unusual about the findings. “That piece of the market is not recovering as quickly as the single family market has,” he explains. “And some of the builders in that [multifamily] segment are in a holding pattern” because of oversupply in some markets.
The same thing seems to be true in the age-restricted arena. Only 16% of members polled answered “yes” when asked if they build houses specifically for 55 or older buyers. (The report did not specify if these builders had actually built any age-restricted units last year.)
Crowe notes that demand for age-restricted homes and communities has been slowing in recent years, partly because “most purchasers already own a home, and are having trouble selling it.” Crowe also points to other research, which he says indicated that many people in this age group have lost considerable wealth, and therefore are working longer to recapitalize themselves for retirement. Consequently, selling a home whose value has diminished in order to buy a new home in an age-restricted neighborhood doesn’t necessarily fit their current financial circumstances.
John Caulfield is senior editor for BUILDER magazine.
Learn more about markets featured in this article: Washington, DC.