With home starts down, contractors diversifying.

BALDWIN HOMES employees (from left) John Zelinski, Roger Bailey and Daniel Dennis prepare lumber on a job site last week in Bingham Township.

"We're lucky that we can in-fill with some additional
mason work during down times," Padella said. "A lot
of contractors who aren’t diversified are just hurting."
– Micheline Padella, F.L. Padella Company

Tony Brakel of Brakel Construction in Cedar says he’s like many homebuilding contractors in Leelanau County – he’s diversifying and working harder just to stay in business.

According to figures available from the Homebuilders Association of the Grand Traverse Area, new home starts in Leelanau County are down more than 32 percent from this time last year. That means homebuilding contractors who want to stay in business need to accept jobs they may not have accepted a few years ago – and must work harder at marketing themselves, according to Brakel.

“I hadn’t taken a bathroom remodeling job in 10 years because I was too busy building houses,” Brakel said. “But things have slowed down so much that I’m happy to hear from customers who have smaller projects for me to do.”

A look at building permits issued by the Leelanau County building inspections department tells part of the story. Overall this year, the number of new building permits issued is down 18 percent from the same time last year. But the dollar values associated with the permits is down about 36 percent. That means builders are not only taking on fewer projects – they’re also taking on smaller projects.

“In this economy, it’s important to stay diversified,” said Micheline Padella of the F.L. Padella Company in Suttons Bay. “Normally, we’re struggling to keep up with all the work – especially this time of year with deer hunting season,” she said. “But it’s pretty quiet right now.”

Padella pointed out that the family business would be hurting if the company was not also able to do masonry.

“We’re lucky that we can in-fill with some additional mason work during down times,” Padella said. “A lot of contractors who aren’t diversified are just hurting.”

A SUBCONTRACTOR, Darryl McNiff, works
on a project in Leland Township last week.

Kathy Maisonville, who may be better known to many Leelanau County residents as the former principal of Suttons Bay Middle School, currently works as executive officer of the regional homebuilders association. The professional trade association is comprised of 542 members representing all facets of the homebuilding industry and the related trades in Antrim, Benzie, Leelanau, Grand Traverse and Kalkaska counties.

“Obviously, there has been considerable downward momentum in the housing market and has been for some time now,” Maisonville said. “Presently, there is a large inventory of unsold homes and the average time a home is on the market is spiraling upward. This creates challenges, especially for our custom builders who are sitting on unsold spec homes.”

A “spec” home is constructed by a builder who speculates that a willing buyer will appear shortly after the home is completed.

“In networking with my fellow executive officers across the state, it seems to me that our northern region is being impacted to a far lesser degree than regions in the middle and southern part of the state,” Maisionville said. “However, the lack of work there is beginning to have a ‘ripple up’ effect in our area and I don’t think we’ve quite hit the bottom of the curve just yet – but it appears we’re getting close.”

Richard Baldwin of Baldwin Homes & Land of Suttons Bay said the tight real estate and home construction market has prompted him to step up his marketing efforts and branch out into new areas.

“We’re still doing pretty well, but I’m doing a few things I’ve never done before,” Baldwin said. “For example, I included one of my homes in the “Parade of Homes” put on by the homebuilders association, and I’ve been taking all of the seminars they offer on ‘green building’ because there’s a growing market for that,” he said.

For several years, Baldwin has been working to develop the Knorrwood Bluffs subdivision in Suttons Bay, but has so much inventory in building lots there that he’s offering a free “Jet Ski” to anyone who will buy a lot.

“Anyone can build there, but I’m hoping to get most of the building jobs in the development – I’m just finding that l need to market myself a little more aggressively,” Baldwin said.

Brakel agreed – but pointed out that it’s not always easy.

“A guy who’s used to swinging a hammer now also has to be a salesman,” Brakel said. “And just because you’re a good carpenter doesn’t mean you’re a good salesman. But if you still want to be standing on your feet once the economy turns around, you need to be able to do more than swing a hammer,” Brakel said.

“What I’m finding,” said Maisonville, “is that builders of longevity are diversifying – many of them staying afloat with remodeling projects and renovations. Most are working on reducing inventory and curtailing specs altogether. If a new home is going up, most likely there already is a buyer for that property. Many smart builders are utilizing this down time to ramp up their marketing efforts, network with colleagues from other regions of the country or spending time investing in professional development.”