Economy could force home buyers, builders to cut back
Glenwood Springs, CO Colorado
ASPEN, Colorado ” The cost and pace of construction in the valley are poised for major changes, even when the recession ends, observers say.
In recent months, tightening credit markets have stalled many projects, particularly the so-called luxury spec homes built by developers, said Ryan Grobler, owner of Carbondale-based Oracle Building Group.
“The whole valley has been hammered,” Grobler said. “If you look at any projects up and down the valley, the foundation is poured and they’ve stopped.”
But even when building ramps back up, would-be buyers may find that tightening credit has narrowed the range of homes they can afford, said Adam Roy, a land-use planner at David Johnston Architects.
He said the days of putting 5 percent or less down on an expensive home have been rapidly replaced by an era in which banks require 20 percent down and mortgage payments don’t exceed 30 percent of the buyer’s income ” which changes the price of a home a consumer can buy.
Even consumers who may not need loans may curb their spending, said T. Michael Manchester, principal of Manchester Architects in Snowmass Village and Carbondale.
“It was a false reality, in my opinion, that stimulated an incredible growth,” he said.
Those trends, industry watchers claim, could affect the way in which homes are built or remodeled ” maybe for years to come.
For example, average home sizes may shrink. Tom Sherlock, owner of Snowmass Village-based Sherlock Homes, said he is seeing consumers decrease house sizes to cut costs. And while Manchester didn’t expect huge decreases, he did predict a decline in the willingness to pay local voluntary taxes in order to exceed local house-size restrictions.
Manchester also expected consumers to begin making more conservative choices.
“I think finishes will be less exotic,” he said. “I think people are going to scale back and learn to appreciate things that, even though they’re less expensive, are still nice.”
Aspen architect Willis Pember predicted that even fixtures and furniture would be affected.
“You’ll see an approach that’s more elemental and stripped down, simpler,” he said.
Observers may also see a move, particularly in the short term, toward remodeling existing homes, rather than purchasing new ones, predicted Sherlock and Manchester. Sherlock said he is already seeing an increased demand for remodels and maintenance work, particularly as building professionals become more available and their services’ cheaper.
“It’s a less expensive way to get that sense of accomplishment or gratification,” he said.
Sherlock also predicted an increase in “staged projects” ” constructing a small home that can be expanded, or choosing to remodel a house a few rooms at a time, for example.
Ryan Grobler, principal of Oracle, said he’s seeing a marked increase in demand for modular building in the recession.
All six of the traditional stick-frame homes that Oracle was scheduled to build this summer were put on hold when the recession hit Aspen, he said. Knowing he’d have to do something “outside the box” to survive, Grobler began looking into modulars.
He said his firm has just finished three modular houses, is about to break ground on two this spring and has six more “in the pipeline.”
Bill Boyd, president of Aspen-based ModSystemSB Inc., is also seeing an increased demand for off-site construction, even with the recession, he said ” including an option known as structural insulated panels, which are wall or roof sections that are built off site.
And Pember said his office recently purchased a building information modeling system, which uses the architect’s design to prepare all the wood needed at an off-site shop.
“We’re actively looking for builders who want to work with us on it,” he said.
At David Johnston Architects, Roy saw an entirely new, less-expensive home sector emerging, particularly downvalley, where consumers getting into the market will likely need cheaper homes than those previously available.
“There’s going to have to be a product that’s more affordable,” Roy said, citing the new credit environment. “Not deed restricted, but lower than what we’ve seen for average market costs.”
To meet this predicted need, David Johnston Architects has recently started focusing on developing more cost-effective design concepts, principal David Johnston said. The firm is currently experimenting with ideas like tightly clustered homes that allow for utility savings or off-site construction.
“I think it’s a mentality shift … people aren’t going to be subdividing parcels into one-acre lots anymore,” Johnston said.
Roy added that such a shift is good for many reasons, including the fact that financially efficient building practices are typically greener.
Still, some in the industry are more hopeful than convinced, when speculating about a shift in the local shelter industry.
“It will be interesting to see if the economy changes [building trends] ” if people start to get these ideas of economy or sustainability,” said Gilbert Sanchez, principal of Aspen-based Studio B Architects. “A lot of people who live here and are concerned about the pace of construction, and impact, kind of hope that’s what happens … I think there’s reason to believe that’s what’s going to happen. But you never know what people are going to do when they get a bundle of cash in their hands again.
“I don’t think we’ve seen the end of the big-house market.”
Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.