
Chip Vaughan never saw retirement as his reward for working. The Philadelphia-area custom builder and high-end remodeler considered work its own reward. “I used to say that I don’t look at what I do as a job,” says Vaughan, 65, despite the industry’s ups and downs. “I’ve been building since the 1970s,” he says, “so I’ve been through several recessions. I always told people, ‘They’re difficult, but they only last about 18 months, and then you’re back in business.’” Throughout a long, successful career, Vaughan has been motivated by a singular passion for building houses. “I don’t have a lot of other big interests, other than travel,” he explains. And if work is so much fun, why quit? “The only thing wrong with that scenario,” he says, “is it’s not much fun right now.” The Great Recession isn’t following the pattern of recessions past, he notes. “Nobody has a clue when this is going to be over. I’ve laid off about half of our people, and all those were people who were keeping my life easy. It’s very trying; it’s very time consuming.” And the conditions that make retirement seem suddenly appealing also work against a graceful transition from full-time leadership. Instead of winding down and letting his company take care of him, Vaughan, like many custom builders of his generation, is working harder than ever.
The financial crisis that flattened the U.S. economy in fall 2008 began as a housing recession, and the unemployment that continues to stifle a recovery has been especially severe among construction workers. Stephen Melman, NAHB’s director of economic services, points to a government estimate of 1.45 million construction jobs lost since the market peak. “But in truth, there are more,” he says. Including related trades, “we’re talking about more than 2 million.” For custom builders, many of whom have faced the wrenching necessity of laying off valued employees, the reality of unemployment strikes painfully close to home. And many older builders are finding their own career options suddenly narrowed. “I’ve seen all ends of the spectrum,” says Brian Pavlick, COO of Custom Builders USA, a 215-member industry cooperative. With business slow and a turn-around seeming distant, some of his organization’s members are opting for an early retirement, he says. “But they’re able to, so they’re walking away. Others are kind of trudging along.” The least common scenario is one in which a builder decides, on his or her own terms, whether to retire or continue working.
Asked if he is planning to retire, Glen Allen, Va.–based custom builder Jim Walker laughs. “I was,” he says, “but I got over that.” Before the recession, Walker, 57, and his wife and business partner, Jane, were following a carefully charted course to retirement. “We had real estate investments, 401(k)s, and IRAs, and we were within two to two-and-a-half years of being able to retire,” he says. But the recession blew the Walkers off course and into uncharted territory. “We’ve used up the majority of that money to stay in business, to keep ourselves afloat. We haven’t taken a salary for at least the second year and maybe going on a third. We’re drawing down what the company owes us rather than taking a salary.” Specializing in semi-custom projects in subdivisions, Walker saw the company’s pre-recession volume peak at around $8 million. “We’re hoping for a couple million this year,” he says, on a mix of projects that has shifted to remodels and full-custom houses.
“We’re meeting the buyers where they are,” says Walker, who remains determinedly positive despite the bad business climate. His strategy, he says, is to “ignore that which I cannot change, which is the macroeconomics, and focus on the microeconomics.” And the latter presents some bright spots. General Electric Co. and Capital One are both expanding in the area, he says. “It’s creating 2,000 jobs.” That development led Walker to approach his mortgage banker with a plan for a surgical-strike spec house in a uniquely promising location. “The surrounding market has less than 10 months of inventory—both resale and new,” he notes. “That’s the kind of gripping and grinning we have to do to find a way to move forward. We’re searching for opportunities and finding one here and one there. The beauty of this is that I don’t have to find 20 or 30. I just have to find one or two.” Those who survive until the market recovers, he predicts, will see an increase not only in business, but also in market share. Before the recession, “I was in three neighborhoods. I’m the only builder in two of them, and there’s only one more in the other. There’s only a few folks you can go to today, and”—when the turnaround comes—“that’s going to make a difference.”