Friday

Do You Break Down Your Prices?

Your company offers a service and along with that service is the price you charge for your knowledge, labor and materials. Most times, the service you offer is considered very expensive by anyone's standards. Many remodeling and construction companies fear that sticker shock on an all-inclusive total price will scare many away. So, they break down the costs into partitioned or smaller amounts.

Did you know that breaking down your costs into smaller amounts may not be the best business method for your company? Studies have shown that when clients are given a total price, even if it's high, it allows them to focus on the overall benefit of the service. Paying $40,000 for a kitchen remodel, for example, will allow them to focus on family gatherings, making meals with ease, and the luxury of new appliances and cabinets. When the price is broken down to include the costs of the counters, the floor, the labor, and the delivery charges they may want to remove parts of the project. If you're thinking it helps to present the partitioned prices to soften the blow, it could backfire on you. When prices are broken down it forces the client to look into what they're getting for the money.

Partitioned pricing helps when you want to get clients used to a secondary benefit that they ordinarily take for granted. For example, if you can show a client you'll install a product and only charge them a small delivery fee - because you manufacture the product and don't need to order from another company. You're showing a benefit over your competitor who charges a huge delivery and handling fee.

For a large project, to help with sticker shock, consider giving them the price per square foot along with the total price and continue to point out the main benefit of their project.

Contractors: Don't forget to bookmark our Contractor Update for more helpful business tips, construction news, website updates, and information on how to help you expand your business. Our goal is to help you succeed.

New to the blog? Did you know you can register for free on our main site to see if we have any remodeling, repair, or construction jobs in your area?

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Lumber Demand Falling

From Manufacturing.net: "A slowdown in home building is likely to end the record run enjoyed by lumber manufacturers over the past four years.

The Western Wood Products Association, which represents lumber manufacturers in 12 Western states and Alaska, said in its forecast that lumber demand fell in 2006 and is expected to slow further during 2007.

A decrease in housing construction is expected to reduce lumber demand in 2006 by 3.2 percent to 61.9 billion board feet, compared to the all-time high of 63.9 billion board feet recorded in 2005. The slide in demand will continue into 2007, with WWPA forecasting total lumber use at 57.1 billion board feet, a decrease of 7.2 percent.

The WWPA expects new housing starts will be down nearly 9 percent in 2006, and fall another 10 percent to 1.69 million in 2007. Residential construction is the largest market for lumber, accounting for more than 40 percent of the lumber used each year.

The association said the volume of lumber used in repair/remodeling is anticipated to decrease as well, though not as sharply. WWPA anticipates repair/remodeling use of lumber to fall 2.6 percent in 2006 and nearly 6 percent in 2007.

'While home prices will still fall in some areas, we think that housing starts and home sales are nearing a sustainable rate,' said Kevin Binam, the association's chief economist. 'But construction is going to be lower than we've seen in the past few years and that will mean less demand for lumber.'"

Thursday

Construction Job News: Bloomberg

From Bloomberg. "The number of homes for sale fell to a seasonally adjusted 545,000 during the month from 558,000 the prior month. Even with the decline last month, the number of unsold homes remains near a record high, making it less likely homebuilding will strengthen outright, limiting economic growth, economists said."

"Sales of new homes were down 15 percent in November from the same month last year, the Commerce Department said in today's report. The number of homes completed and waiting to be sold rose by 2,000 to 169,000 in October."

"The number of new homes available have averaged 555,000 this year through October, compared with 351,000 during the past 10 years, according to government figures. Existing home sales inventories are also near a record, averaging 3.515 million this year."

"Cancellations of purchase contracts, which aren't counted in the government's numbers, have mounted. 'That’s growing,' said economist Kevin Logan. 'There is even more inventory than actual inventory numbers suggest.'"

"Hovnanian Enterprises, New Jersey's largest builder, on Dec. 18 reported a fourth-quarter loss on cancellations of new-home orders. Hovnanian customers canceled 36 percent of their contracts in the period, an increase of 25 percent, the company said."

"'We didn't have this in other slowdowns, customers walking away,' CEO Ara Hovnanian said."

"The housing slowdown is costing jobs. Builders shed 53,000 workers in the last two months, according to government reports. Manufacturers shed 59,000 workers in the same period, while goods producing companies, some at companies that produce housing-related supplies or products, cut 102,000 workers."

"'Even if sales stabilize at this level, the contraction in construction activity is still in front of us,' said Kevin Logan, chief markets economist at Dresdner Kleinwort in New York. 'That's what's going to affect the economy in the year ahead.'"

"Building permits in November fell to a 1.506 million-unit pace, the lowest in nine years, the Commerce Department reported."

Wednesday

Our Budget Survey Results

Over the last few weeks, we surveyed our network of service professionals about our budgets that we provide in the leads. We conducted phone interviews and asked the question about leaving the in the budgets in last week's Activity Update. We had been hearing from some contractors that they weren't happy with the budget information the jobs being posted on our site. Since our goal is helping you grow your business, we wanted to make sure we are giving you what you need to do that.

Here is what we discovered:

The results from our survey show that a large majority of our nationwide network likes having the budget information that is entered by the project owners. Over 90% want us to leave the Budget question on the project form.

Most said the budget was a good way to pre-qualify the lead. Many feel they could educate the project owner about the true cost of their project. The majority did not feel their budget was the project owner's final decision on what they would pay.

Over 75% said they would still call the project owner, even if they felt the budget was too low. The remaining companies said they would probably not contact them because they only are looking for the "high end" jobs. What those companies may not realize is that the customer may have a high-end job but does not want to promote (over the Internet) what they're willing to spend. How many people walk into a car dealership with their checkbook wide open announcing how much money they have to spend before they even find out what the cars cost?

As more people turn away from their phone book and turn to the Internet to find service professionals, we'll continue to market to them to help bring your company more business. The results from our survey show you like to have as much information as possible about those projects. So, we will continue to provide budgeting information. And we will continue to try to make the budgeting choices as accurate as possible for each category.

If you have any suggestions for our budgets, please let us know!

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Love the Budget or Leave it Out?

Construction Jobs and News from Home Builders

Construction job news from the Contra Costa Times: "It was bound to happen. The job market for home building in the East Bay has begun to stumble, halting a strong run. The pace of employment expansion in the housing sector is a fraction of what it was earlier this year."

"Only last spring, residential construction was booming in the East Bay. Jobs in home construction were being added at a 10 percent annual rate in April and May. But by October, jobs were being added at a 3.5 percent annual rate."


And from Florida's TC Palm: "Layoffs at another leading Treasure Coast homebuilder again raises questions as to when the new-home market will rebound. DiVosta Building Corp. executives said Tuesday they will lay off 218 employees in the Treasure Coast and Palm Beach County."

"'I think this is a continuing indication of larger national builders downsizing to accommodate the changes in the residential housing market,' said Don Santos, past president of the Treasure Coast Builders Association. 'I think there's a lot more of this going on in the field, but we don't hear about it.'"


Finally, from the Associated Press: "Alex Barron, who follows homebuilders for JMP Securities, said the industry will get worse before it gets better. He said with so much inventory, builders like Hovnanian must cut their prices to compete."

"'Until those inventory levels come more in line with historical levels, it's going to be very difficult for builders to show an improvement,' he said. While Hovnanian posted a large write-off, he said the company is being more realistic than other large homebuilders 'about how deep this current downturn is.'"

Bookmark the Contractor Update and check back with us on a regular basis for more news on the construction and remodeling business outlook. We are a great resource for news, trends, and information on the industry.


Sunday

Love the Budget or Leave it?

At Construction Deal, we've been hearing from many contractors in our network about the project budgets.

You've said the budgets posted by project owners are too low. Since our goal is to help you expand your business, we wanted to reach out to you.

We always try to provide you with as much information as possible to help you bid on the remodeling, building, and repair leads posted on our site. The budgets are chosen by the homeowners and business owners but many of you have complained that these budgets are not realistic. These are not numbers set in stone or final in any way - these are the figures from people who may not have any idea how much it will cost or are afraid if they put too high a budget, they'll end up paying too much.

So, we want to know:

Do you want us to continue to include the budget information in the projects we send you?

Please let us know what you think. Contact us at bizdev@constructiondeal.com or post a comment here on Contractor Update! (Click on the link just below that says, "Comments")

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Our Budget Survey Results

Friday

Black & Decker Lowers Profit Forecast

Some more construction reports: "Black & Decker Corp., the biggest U.S. maker of power tools, cut its annual profit forecast for the third time after a U.S. housing slump 'significantly' reduced sales. There may be 'additional pressure on our earnings,' said CEO Nolan Archibald."

"The slowing housing market also caused Illinois Tool Works Inc., the maker of Duo- fast nail guns, to cut its profit forecast. 'It's spreading, and we don't know how far and how wide it's going to spread,' said Marvin Roffman, president of Roffman Miller Associates in Philadelphia, which manages $390 million, including Black & Decker shares. 'Be prepared for more disappointment from Black & Decker and others' who rely on the housing market."

"'Most disappointing, in our view, is Black & Decker expects their disappointing trends will continue well into 2007,' wrote Michael Rehaut, analyst with JP Morgan."

Monday

Housing Market has Contractors Feeling the Crunch

The Worcester Telegram in Massachusetts: "In times of tough housing markets, the remodeling industry has historically seen a boost as homeowners tap into their equity to fix up their properties to sell or meet their changing needs. But after years of double-digit home price appreciation, the market is in the midst of a correction."

"Area home prices have dropped more than 4 percent since the first of the year, and Central Massachusetts remodelers say their jobs have slowed down or been scaled back from what they were even a year ago."

"'I've seen everything since the early 1980s,' said William J. Morin, owner of Bill Morin Construction in Northbridge. 'I've been through three recessions. I haven't seen it this bad. I would average almost a call a day, but now I’m not getting a call a week.'"

"Guy A. Webb, executive director of the Central Massachusetts Builders Association, said some homeowners who would pay for remodeling projects with their home equity have probably already used it for other things."

"In his own contracting work, Mr. Webb said, more than half of his customers used the equity in their homes to pay for their projects. 'Tapping into equity is very common,' he said."

"'I think my membership is pretty well-prepared for this,' Mr. Webb said. 'They scaled down their operations already. I assume some let go of some employees. A lot of builders and remodelers… just use subcontractors now. They're just calling them less.'"

"Kenneth R. Gaumond, owner of New Surroundings in Auburn, said the housing market correction has not resulted in more home improvement spending, as it had in the past. 'Spending is down everywhere,' he said. 'People are still more likely to adapt their home to their needs. It's not scaring people away from projects, but they're scaling down their wish list.'"

"During the housing boom, homeowners took advantage of their growing equity, using home equity lines of credit for college expenses and purchases that could be paid off more cheaply than with a credit card's higher interest rate."

"'They're continuing to borrow, but at a slower pace,' said Gus Faucher, director of macroeconomics at Moody's Economy.com. 'Price growth (in homes) has come to a halt. People have been borrowing against their equity. And there is less equity. People are strapped. There's less ability to borrow.'"

"George Yacik, a VP a New Jersey firm that studies the home mortgage market and home equity lending, said the dollar volume of home equity borrowing in the Worcester area is about half of what it was last year. Dropping house prices have an effect, too, he said. 'That certainly plays a role. Their equity is not growing like three to five years ago. People have been tapping their equity all along.'"

"Walter Plew, owner of Gemini Home Improvement in Worcester, said that with the slow market and oversupply of houses, there is evidence they may be doing less. 'Last year and before, with the market up, there was more money available to spend,' he said. 'They've dropped doing the big kitchen and bathroom. For now, they're doing painting.'"

"'The lumberyards, Home Depot, the subcontractors, they all say it's dead. Builders are going into the remodeling business. That was always the golden egg when home sales dropped off. There's a lot more people in the business now,' Mr. Morin said. 'Mr. Morin, who has been in business 21 years, said the volume and scale of his jobs now are less than in previous recessions."

"'In the past, when new construction slowed, home improvement increased,' Mr. Morin said. 'Now, new construction and sales of existing homes are in the gutter. Values are dropping as well. Home improvement is off. People have less disposable income than they had five years ago. I make less money now than I did five years ago.'"

Negotiations, Influence and Your Business

You negotiate with people every day. You deal with subcontractors, suppliers, and potential clients. It's important to understand the art of negotiation - to help you provide the best solution for your clients and help you understand an unscrupulous supplier. Whenever you're persuading someone, it should always be toward a win-win for both parties. The best way to do that is to be prepared to negotiate. Psychologist Robert Cialdini wrote a book that contained his 6 Laws of Persuasion. These laws will help you be more prepared:

Law of Reciprocity
People want to repay you for doing something nice. If you give them what they want or something useful, they'll want to pay you back. If you're dealing with a supplier charging more than normal, you may want to ask for a reciprocal payback for the next time you purchase something. Or, if you give a useful calendar as a free gift to your clients they'll respond by referring you to others.

Law of Scarcity
When people cannot have something or find out it is a scarce resource, their interest is peaked. This law works not because people want to get the product or service before it's gone, it works because they realize that if others want it then it must be a good thing. If you go to your supplier because you're out of time or low on a product, the supplier has the upper hand. You have something they need. They can claim that they're running low and can charge you more. Or, if you are very busy because you have multiple jobs, a potential client who really wants your services may be willing to pay more to be made a high priority.

Law of Liking
People will believe in someone they like. They trust friends because friends are like them and feel the same way. When dealing with a potential client, it's important to build a rapport with them. Find something in common and you'll be letting them know that you're more alike than they realize. Suppliers will try to get you to like them and may use another salesmen or manager to be the one you don't like. Car salesmen do this by becoming your friend and then asking their managers for approval on a price - and they already know the answer - but pretend they're doing this because you're best friends.

Law of Authority
People believe in experts. Even if the expert is a famous person, they consider their opinions because they've been elevated based on their talents. If it's good enough for the "expert", it's good enough for them. They think they'll become more like that expert. Your supplier will tell you they have the best product or prices in town - you need to do your research to verify it. Or, if you spend more time with a potential client instead of just tossing out your price, you'll convince them you're the expert and can handle the job better than anyone.

Law of Commitment and Consistency
People want to make a commitment. Once they decide on what they like or believe - they'll stand by that decision. Even if it proves wrong. If a potential client trusts your service, they'll believe in you. One way to get customers to trust and believe in your services is to get them to agree with you. Instead of saying, "Here's how much it will cost," you could say, "You believe in the best quality materials, right? And you believe in making sure the project is done right and not just fast. True? Here's how much you'll need to invest for that level of quality and that level of care." Or, for example, your supplier may lead you to give many yes answers on a number of small questions. If the supplier gets you to agree to these small decisions, it will be easier to close you because you're already in agreement.

Law of Social Proof
People want to conform to the social norm. If you're not sure which product to buy, you'll buy the same product everyone around is buying. People are trained to do what society says. Didn't your parents ask, "If everyone jumped off the bridge, would you jump, too?" Give potential clients a long list of references and testimonials. By letting them know you’re the best person for the job, they'll trust in your ability to make them as happy as you've made others. Or, suppliers may tell you your competition buys from them, so why shop anywhere else? Follow up with your competitors to see if they’re willing to give a testimonial on those suppliers. Once you know the truth, you can use it to persuade suppliers that they need to work with you on terms that will provide a win-win situation for both parties.

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Source – Cialdini, R. (1998) Influence: The Psychology of Persuasion

Thursday

Latest News on the Housing & Construction Markets

From USA Today:"Dozens of sawmills around the country are laying off workers, shutting down temporarily or trimming hours, as a steep drop in home building hits demand and prices. 'In lumber, basic economic rules apply: supply and demand. The demand dropped off quickly, and so did the price,' says Joe Kusar, VP of Tolleson Lumber, the largest lumber maker in Georgia."

"In Northern California, Pacific Lumber said Dec. 1 that it was laying off 90 people, or 19% of workers. 'A (price) decline of this magnitude is virtually unprecedented in the last 20 years,' says Pacific Lumber spokeswoman Andrea Arnot."

"Tim Cochran of an independent newsletter specializing in softwood lumber, calls the current downturn the longest bear market since 1990. '(Prices) went up so high with the housing boom … and so when they go up hard they just go down that much harder,' Cochran says."


The Chicago Sun Times: "Executives of several of the largest home builders predicted that inventories would decline, and prices and home starts would rise, in the latter half of 2007, as they spoke at the 10th annual Homebuilding Conference."

"Toll Brothers Inc. CFO Joel Rassman declined to predict when the market would hit bottom. 'Nobody can know when the bottom is,' Rassman said. 'I think there's a reason to believe that when the big builders control 50 percent to 60 percent of a market, they'll probably have to eat each other,' he said."


The Pasadena Star: "A housing slowdown affects construction, loan agents, landscapers and many other related businesses, said Michael Carney, executive director of the Real Estate Research Council of Southern California. 'Concern for the housing market as a whole may spill over into consumer spending,' Carney said."

"Builders are reacting to sales declines by not getting permits to build new homes. California's total units in permits is expected to decline 16 percent in 2006, and that number could be closer to 26 percent, Carney said. 'Developers are clearly adjusting as fast as they can,' Carney said."



Sunday

Bloomberg: Fewer Construction Jobs

From Bloomberg: "The housing slump is also resulting in job cuts at construction companies and related industries. Builders shed 26,000 jobs in October, the most since February 2003, the Labor Department said. 'The weakness in orders and obvious further declines in housing-related activity suggests more weakness in coming months,' said Steven Wieting, managing director at Citigroup Global Markets."

"'Construction and manufacturing are certainly the anchors weighing down growth at the moment,' said economist Joshua Shapiro. 'Consumer spending is hanging in there, but there are certainly a lot of crosscurrents that will lead to pretty anemic growth in the fourth quarter and probably the first quarter as well.'"


Top 10 Tips to Surviving an Economic Downturn

Saturday

Top 6 Hiring Tips

Service companies in the construction industry are constantly changing, expanding, and evolving. Bringing in new workers to handle those adjustments is a key component to any successful business. Here are some tips on how to make sure you avoid mistakes when you're hiring new full-time, part-time or contract employees:

1. Screen your Applicants - Make sure you investigate potential employees by doing background checks to look for past problems. Check for accuracy on their resumes or applications. Look for any criminal records. You might even consider drug testing and, if they're going to be handling money, credit checks. Spending a little time and money at the beginning could save you a lot of time and money down the road.

2. Interview your Applicants - Even if the potential employee is a strong referral, you want to make sure you ask questions and evaluate the person. You need to know how well that person communicates, how they handle situations, and if they can do what they say they can do on their resume. Interviewing is more than just asking where they see themselves in 5 years. Make sure you ask questions that put them in difficult situations to find out how they would react. Look for answers that offer multiple alternatives or options to see how creative they can be. Ask questions that give you an idea of how well their personality will match with yours.

3. Hire the Right Person - Sounds simple, but it's not. You may have two top candidates for a position. One has superior qualifications but you know your two styles will clash. You may need to go with the less qualified person, knowing that you'll be able to work together and bring that person up to speed. There will be a greater chance that this employee will stay become part of your team. The more qualified applicant could end up being a cancer to your other employees, your clients, and you.

4. Be Prepared - Know everything you can about the job you're hiring this person for. He or she is going to ask a lot of questions and you'll need to know the short and long range plan for the position, the salary range, potential for growth within the company, and skill requirements for the job. You should know what is needed from the position more than the potential employee. If you are not prepared, you may find out too late that you don't have the right person for the job.

5. Be Realistic - Don't promise the world to a potential employee if you cannot deliver it. And do not expect a potential employee to be able to deliver the world to you. No applicant is perfect. It's not a good idea to set up or expect unrealistic performances - you will both be disappointed and the relationship will not last.

6. Get it in Writing - Whatever promises you make to each other, put down all the details in a written contract or offer. It can avoid problems that might come up later. By listing how long the employee or subcontractor will be engaged, how much will be paid, what benefits are included, and what the job requirements are, you can prevent arguments and even lawsuits. Be as detailed as possible with any offer or contract you make and you'll be starting out your new relationship on the right foot.

Friday

Ever Had One of Those Days?

For our Contractors - the next time you think you've had a "tough" day on the job, out there building and remodeling and repairing... you might stop and consider the day these guys had!






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Tuesday

Top 5 Ways to Expand Your Business

As a small business owner in the construction industry, you might be considering ways to expand your company. Expansion is not for every company. However, if your business has maintained steady profitability, your service area has potential for growth, and you have systems in place to handle the growth then it might be time to expand:

1. Add a New Service - If you're an electrician, you might consider adding low voltage installations to your list of services. If you're a residential remodeling company you could include home additions as an avenue for growth. The great thing about adding a new service is that you have an excuse to promote it. You'll be able to contact every past lead and every old client to let them know you now offer new services. It could lead to more business and more referrals.

2. Expand Your Market - If you currently work in one city or one county, you could expand and advertise in new locations. Many conduct business near another state -- it makes sense to get licensed in that other state and offer services there. It could mean hiring another crew or adding additional vehicles to cover the new ground so having available financing could be an issue. Increase slowly to test the waters and pull back if it's not feasible. You may end up doing well in a new market because those customers may be sick of or tired of their choices of service professionals in their area.

3. Open a New Location - Similar to expanding to a new market, you might consider opening an office or hiring a crew in a new city or state. You'll need to focus your marketing efforts in that area as well as maintaining your current marketing projects for your area. It will also mean frequent travel to the new location to ensure quality of work. Pay attention to advice from any crew you hire because they'll know more about suppliers, competitors, and potential clients.

4. Partner Up - Merging with another service competitor or a company in a different line of work could provide an increase in market share. Another company may have a lot of great workers, tools and equipment, and a long list of referrals but is being poorly run. By acquiring a company in bankruptcy or merging with a strong competitor, you can quickly expand and maybe even double revenues in your area. There will always be problems of merging technology, management styles, and visions for the business. Make sure you have an exit strategy if the alliance does not work out. Have that strategy in writing in the form of contracts.

5. Work New Categories - If your company only focuses on commercial work, residential work, or contracts with the government, you might consider expanding into one of the other categories. It's certainly not an easy task to make this sort of switch. It is not a fast transition to make because it requires extensive retraining, retooling, and better infrastructure for the business as a whole.

Whenever you're planning to change your company by expanding it:

- You need to make sure that you won't be affecting your current business or quality of your work

- You have financing in place to handle the change

- You have employees with the right skills to handle additional work and paperwork

- You are ready to delegate work to others and that they're ready to handle higher demands

- You have the support system to handle any length of transition to your new business model

California Housing Starts Decline in October

According to the LA Times: "Housing construction in California dropped sharply last month, led by a steep decline in single-family homes.

In October, the number of permits declined 29% to 10,520 compared with a year ago, the California Building Industry Assn. said. Builders are backing off constructing new homes until they can sell existing inventories.

That prompted a 47% plunge in single-family permits, the trade group said. Permits for apartments and condominium complexes fared slightly better, falling 28%. In Los Angeles County, however, multifamily permits rose 53%."

Monday

Area Home Building Pace Has Slowed

From the Orlando Sentinel: "The phone has been ringing lately at Terry's Electric in Kissimmee, and many of the calls have been from electricians looking for work now that home building in the area has started to slacken.

Terry's, with about 550 employees, is happy to snap them up because the company is still busy with commercial-construction jobs, wiring schools and mixed-use developments across Central Florida.

Residential construction is slowing here and across the country, and layoffs have been thinning the ranks of home builders everywhere, raising fears of a job bust that could ripple through the rest of the economy. But the commercial side of the construction business is helping to buffer the downturn.

"The housing souffle has finished baking and is out of the oven and cooling quickly," said Sean Snaith, the UCF economist who heads the institute.

"There is some softening on the condo side, but the commercial side is strong -- for hospitals, large-box retailers, schools, infrastructure," said Gary Redwine, senior vice president of Resource, Acquisition and Management Services, a Tampa-based construction employment-and-training company known as RAMS.

"Most nonresidential-construction people say the labor market is tight," even with the home-building slowdown, said Ken Simonson, chief economist for Associated General Contractors of America. "They still have a hard time finding qualified workers and subcontractors."

Nationally, the outlook for commercial construction is strong for hotels and resorts, hospitals and health-care facilities, schools, and water and sewer projects, said Simonson, the industry economist.

"Retail construction will suffer, along with home building," he said, but overall, "unemployment remains low, and construction workers in general should be able to find jobs."

Some skills, such as concrete finishing, plumbing, wiring, and heating and ventilation, are transferable from residential to commercial jobs to some degree, Simonson said. Specialty carpentry jobs are not as easily transferred, and not all subcontractors have the size, or "scale," to work commercial projects when residential contracts dry up, he added."

Construction News: Lowe's Warns of Earning Slide

NEW YORK (CNNMoney.com) -- "Lowe's Cos., the No. 2 home improvement retailer behind Home Depot, on Monday said third-quarter profit rose but warned it would miss forecasts for the current period.

But Lowe's said it expects to earn 36 to 38 cents a share in the fiscal fourth quarter, which runs through Feb. 2. First Call had been forecasting earnings of 41 cents a share, although the better than expected third quarter may let it still meet the full-year forecast of $1.97 a share. It said it expects EPS of $1.95 to $1.97 for the full fiscal year.

Sales at stores open at least a year, an important retail gauge known as same-store sales, fell 4 percent in the quarter. The company blamed the weak sales comparison on the combined effects of a slowing housing market, significant deflation in certain commodity categories, and a difficult comparison to last year, when there was significant spending on hurricane recovery and rebuilding efforts.

"We believe many external headwinds will exist through the balance of the year and the first half of fiscal 2007," said a statement from Lowe's Chairman and CEO Robert Niblock.

Last week, Home Depot reported weaker than expected earnings, as its executives citing a slowing U.S. economy, declining home sales and prices, and fewer refinancings for the weaker than expected performance of its retail division.Housing starts and building permits both fell sharply in October, the government reported Friday, as builders responded to weaker prices and a large inventory of homes for sale by stopping building.

Sunday

Building Your Company Brand

What is branding? Your small business needs an identity - your identity is based on your company strengths. Your strengths are the values your service provides better than any other company (your skills, your prices, or your customer service.) When you know your service's strength, you want to promote this strength to current and potential clients.

How do you promote your Company Brand? You must let people know about your company strengths everywhere you have a presence and it must be consistent. Your company logo, name, and even your colors and fonts should be present and look identical on all of these sources:

- Business Name
- Business Logo
- Business Slogan
- Showroom
- Signage/Company Vehicles
- Uniforms
- Website
- Yard Signs/Door Hangers
- Business Cards/Letterhead
- Tradeshows
- Advertisements

If your company strength is your excellent customer service, for example, you need to preach this to every customer in all of these places. Your slogan should have your customer service promise: "Ed's Plumbing: We're Always Ready to Help - Night & Day!" It would even be great if everyone answered your phone by saying, "Ed's Plumbing -- I'm here to help! Night and day!" Because it reinforces your service's brand and people will return to you, refer you, and sing your praises. That's what keeps your business going strong.

Saturday

October Housing Starts Tumble

The Census Bureau has released the new home numbers, "Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 1,535,000. This is 28.0 percent (±1.2%) below the October 2005 estimate of 2,131,000. Single-family authorizations in October were at a rate of 1,173,000; this is 3.8 percent (±1.3%) below the September figure."

"Privately-owned housing starts in October were at a seasonally adjusted annual rate of 1,486,000. This is 14.6 percent (±7.6%) below the revised September estimate of 1,740,000 and is 27.4 percent (±5.3%) below the October 2005 rate of 2,046,000."

"Single-family housing starts in October were at a rate of 1,177,000; this is 15.9 percent (±7.4%) below the September figure of 1,400,000."

From Reuters: "Many economists had thought the worst of the housing slump had already passed, and data released earlier this week seemed to support that idea, but Friday's data cast doubt on that view. "The raw number (housing starts) looks incredibly weak,' said econimst Robert McIntosh."

"Permits for future groundbreaking, an indicator of builder confidence, fell 6.3 percent to an annual pace of 1.535 million units, the lowest rate since December 1997, from a 1.638 million pace in September. Permit applications were down 28 percent from October 2005."


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Wednesday

Slumping Housing Market Affecting Everyone

From the Globe and Mail: "First, Americans quit buying homes. Now, they may have stopped fixing and furnishing them too.

Home Depot Inc. reported a 3-per-cent drop in profit in the three months that ended in October, amid mounting evidence that the U.S. housing slump is getting worse.

"I don't think we've seen the bottom yet, and I don't see anything that says it's going to get significantly better in 2007," said Bob Nardelli, Home Depot's chairman and chief executive officer.

Mr. Nardelli said job losses in the home construction market are the worst he's seen in 35 years, and the pain is starting to spread to the home renovation market.

"The loss of jobs . . . in the home construction market is at unprecedented levels," Mr. Nardelli told analysts on a conference call yesterday. "Home builders [are] basically writing off earnest money and liquidating land. We're starting to see a lot of that unemployment find its way over to the small repair and remodel contractors."

But there were also sharp declines in building materials (down 0.3 per cent), furniture (down 0.7 per cent) and department store sales (down 0.7 per cent). Over the past three months, sales of building materials have plunged at an annual rate of 10.6 per cent.

"The housing slowdown left its grimy fingerprints all over this report," BMO Nesbitt Burns economist Douglas Porter said in a note to clients.

Lower gasoline prices don't seem to be causing consumers to spend elsewhere, as many economists had predicted. Even if you strip out volatile gas, food and auto sales, all other retail sales rose a meagre 0.1 per cent October.

"People are being very cautious," said Ian Shepherdson, chief North American economist at High Frequency Economics. "The housing crunch is now hurting."

Friday

Government Resources for Small Businesses

Believe it or not, the government does more than just take your taxes. As a small business, you may be entitled to benefits that can help your company continue and thrive. Sometimes it's hard to find all these valuable resources on your own, so Construction Deal would like to save you some time by doing the research for you.

Americans with Disabilities Act: Guide for Small Businesses - Discusses basic requirements businesses must follow to ensure that facilities are accessible. Also includes toll-free sources for assistance.

Avoiding Office Supply Scams - Learn the most common office scams and tips to avoid receiving overpriced or unordered merchandise.

Being An Entrepreneur - For various types of small businesses, explains how to create a business plan, decide on the best legal structure for your business, and market it. Also provides information on selling your business.

Choosing a Retirement Solution for Your Small Business - Get the facts on the most popular types of retirement plans, how to establish them, the tax advantages, and more.

Consumer Guide to Buying a Franchise - Want to start your own business? Find out about the benefits of franchise ownership, the limitations, choosing the best franchise for you, and investigating franchise offerings.

Doing Business with GSA - The General Services Administration (GSA) buys a wide variety of products and services for federal agencies. Learn about GSA's contracting opportunities.

Facts About...Starting a Small Business - Explains how to create a business plan, research your market, price your products and services, and raise money for your business.

General Information Concerning Patents - Learn about patent laws, application procedures, costs, and more in this revision Includes application form with instructions.

Introduction to Federal Taxes for Small Business/Self-Employed - This helpful CD-ROM explains what you need to document expenses and deductions and file federal taxes.

Q's & A's for Small Business Employers - Use this guide to develop an effective safety and health program, identify safety hazards, reduce injuries, and more.

SBA Programs & Services - Find out how the Small Business Administration can help you start or expand a business. Describes SBA’s financial assistance programs, business development programs, and more.

Using Consumer Reports: What Landlords Need to Know - Learn how to use consumer credit reports to evaluate rental applications of prospective tenants and what you are legally required to do.

Using Credit Reports: What Employers Need to Know - Explains the legal steps you must take when using credit reports to hire or evaluate employees.

Thursday

More Home Building News from California

From the San Francisco Chronicle, "Toll Bros. Inc., the luxury home builder with projects in San Ramon, Dublin and Sunnyvale, said Tuesday that it will report a 10 percent drop in quarterly home-building revenue in another sign of a weakening housing market.

Citing a higher-than-usual rate of home sale cancellations in Northern California, the company said the number of contracts it signed throughout the country fell 55 percent in its fiscal fourth quarter, which ended Oct. 31. Northern California accounted for 11 percent of the canceled sales nationwide.

"You had a high level of speculative activity, more flexible down-payment rules, and you're coming off a period of very rapid home price increases," Toll Bros. spokesman Fred Cooper said.

The company closed sales on just 167 units in California during the quarter, less than half of the 362 home sales completed in the same period a year earlier. Revenue from home building in California for the full year dropped 34 percent to $710.3 million from $1.08 billion.

The company said it expects the softness to continue in Northern California and other former hot spots in the country.

Toll also said it will take fourth-quarter write-downs of $50 million to $100 million on the land it owns and has options to buy, up from a prior forecast of $4 million. The charges will reduce net earnings to 36 cents per share, down 18 cents.

The market decline comes as deteriorating consumer confidence and falling prices cast a growing pall over the sector. Toll Bros.' smaller rival Beazer Homes USA Inc., which builds houses largely for first-time buyers, posted a 44 percent decline in quarterly earnings and forecast profit sharply below expectations for its 2007 fiscal year.

Though the reports showed weakness at both extremes of the market, neither was unexpected, coming on top of a series of government and industry reports that showed America's long housing boom has corrected. New home sales and prices are both sharply below levels a year ago, as rising interest rates and steep energy prices dampen consumer spending.

As a result, neither company's shares suffered much in Tuesday trading. Toll Bros. stock fell as much as 2 percent in early trading but later recovered and was close to unchanged, a sign investors had already factored in weakness.

Economic trends are leading customers -- even those in the high-income bracket that his company serves -- to take a wait-and-see approach, according to Toll Bros.' chief executive.

"We continue to look for signs that a recovery is imminent, but can't yet say that one is in sight," Robert Toll, the CEO, said in a statement.

Preliminary numbers show the company posted home-building revenue of $1.81 billion for the fourth quarter. Analysts, on average, were expecting $1.87 billion, according to Reuters Estimates.

Toll Bros. said it expected to deliver 6,300 to 7,300 homes for fiscal 2007, compared with its previous forecast of 7,000 to 8,000. The company expects to deliver 1,500 to 1,800 homes in the current first quarter."

Home Builder Reports from California

The Desert Sun in Palm Springs reports from California. "Home builders across the Coachella Valley have their pulse on the slowing new-home market, and they're reacting by constructing fewer homes, bolstering incentives and scrutinizing construction costs."

"As jittery home buyers abandon sales contracts or balk at buying amid uncertainties in the housing market, builders in the valley and across Southern California have cut back on construction. There were 2,782 homes being built at the end of September across the valley, down from 3,748 at the same time last year, according Metrostudy."

"In the Riverside County/San Bernardino/Ontario area, 1,691 building permits were issued in September, down from 5,101 in September 2005, according to the California Building Industry Association."

"The slowdown in new-home building permits is in direct response to growing new-home inventory. Some 1,511 new homes sat vacant at the end of the third quarter in the Coachella Valley, compared with 537 at the same time during 2005, said Steve Johnson, of Metrostudy."

"'The builders are taking the initiative to slow down their construction starts to deal with this inventory,' he said. Home builders are reacting in other ways, too. They're beefing up home-buyer incentives, reigning in escalating construction costs wherever possible and analyzing land deals."

"Ashbrook Communities, with developments in Cathedral City, Palm Springs and Indio, is watching its spending on everything from construction materials and marketing to payroll, while at the same time aggressively introducing new incentives to attract pensive buyers."

"Now you really need to focus on the basics as a builder," Robert Perryman, president of Ashbrook Communities' Desert Division, told fellow builders and real estate agents at a recent real estate forum in Cathedral City.

That's a marked change from two years ago, when families stood in line at home builders' offices in the valley to put their names on lists for the newest development phase. Then, home builders could afford to absorb more of the costs."

Monday

Maintaining Personal Relationships with your Clients

Elections are upon us. I have stopped answering my phone because I'm being bombarded by endless phone calls to vote for this politician or that proposition. It's not that I don't care about the issues - I do. I will be exercising my most important right as an American on Tuesday, for sure.

But what I don't like is the fact that all of these messages have been recorded messages. Canned responses from the actual politician or some more important politician who recommends them. Now, I live in California but I do not expect a call from The Terminator himself. That's not my point. What I'm trying to say is that it's important to have real people reaching out to me, whenever possible -- not a recorded message. Not an impersonal, photocopied flyer or door hanger.

How does this affect your business? As a service professional, it's very important for you to maintain a relationship with your past clients. You have already paid a very large sum in your advertising and marketing efforts to acquire each and every one of your customers. Why not use that to your advantage and keep in touch with them? Send them an email newsletter. Send out holiday greeting cards with a company photo of all your workers. Make a follow up phone call to give them some free advice on how to maintain any of the products you installed or services rendered. Make it personal - either directly from you or one of your staff - and they will remember and refer you and your company.

It's understandable if you don't have a lot of time. You don't have to send out a mass mailing for every single customer you've ever had all at once. You don't have to call them all in one night. But pick a time, each week, and get in touch with some of your clients that you've only worked with once. Your regular customers will be happy to get a Holiday card in December.

If you had installed a concrete kitchen countertop and called to remind me that it was time to apply my penetrating sealer... I would certainly remember you when it was time to remodel my bathroom.

And when your company needs additional job leads, remember Construction Deal. You can register your service with us for free. Review current and past remodeling, building, and repair job leads in your area. If you have enough activity, you can subscribe at any time. Give us a call at 866-663-4711 if you have any questions!

Wednesday

Big Home Builders Slow Construction

From the Bend Bulletin, "Earlier this year, David Alexander's carpentry crews had to scramble to finish 25 to 30 houses a month.

Now, Alexander said Friday, they're working on seven to 10. His employee count has slipped from 14 to 10. He's searching for more work to keep his remaining employees at Bend-based David Alexander Construction working through the winter, and he's hoping that new-home sales pick up enough to get the construction season off to at least a moderate start next year.

"Down and level," Alexander said. "That's what we're hoping for. Down and level."

Awash in inventory, Central Oregon's largest home builders say they are hitting the brakes now, taking millions of dollars in potential construction money off the table in the process.

Building permits are down 22 percent in Bend so far this year from 2005's record levels, according to Don Patton, owner of Cascade Central Business Consultants, a business that follows industry trends. In Redmond, permit activity is off 28 percent.

So far, the slowdown hasn't left any obvious scars, even on an economy that is unusually dependent on construction and real estate spending.

Total employment in the construction trades in Deschutes County was up 8.3 percent, or 610 jobs, in September 2006 over September 2005, Oregon Employment Department regional economist Steve Williams said. That's a significant increase, but slower than the 11.6 percent job growth recorded in the sector from September 2004 to September 2005.

Local banks have so far shown few signs of slowing.

Bank of the Cascades, the largest player in Deschutes County's lending market, reported profits up 16.8 percent in the third quarter.

At Prineville-based Community First Bank, a smaller but growing bank that deals mostly with small contractors, loan portfolios are up 20 percent since the first of the year, President and CEO Robin Freeman said. The bank is buttressed in part by loans for commercial construction projects - a field undampened by the downturn in residential real estate.

Smaller contractors - particularly ones that specialize in building a handful of higher-end houses every year - have shown a bit of a slowdown, but not much, Freeman said.

The most dramatic downdraft in residential construction is coming from the larger production builders who make their living building entire subdivisions at a time, fueling hundreds of subcontractors and suppliers in the process.

The stakes for the local economy could be high.

Real estate services, residential construction, and commercial and institutional construction accounted for nearly $1.90 of every $10 earned in the local economy in 2003, about twice the statewide average, according to an economic survey commissioned earlier this year by the Central Oregon Builders Association.

The question is whether this summer's pullback in residential construction is enough to seriously dent the local economy, or whether building levels are simply retreating from an overheated state to one that's sustainable.

What the builders say

Bill Duffey, sales manager for Palmer Homes, one of the region's oldest homegrown production builders, says it's the latter.

Palmer pared its construction target this year from 125 homes down to 90 when sales suddenly slowed in the summer, Duffey said.

The company is offering price breaks of as much as $20,000 per home to cut its inventory load before the end of the year, Duffey said, and it's intentionally halting work on some of the homes it already has under construction to give potential buyers the chance to choose custom finishes.

Total sales projections have dipped from as high as $42 million to probably no more than $38 million, Duffey said.

Even so, because the company is building on land that it bought at relatively inexpensive prices three to four years ago, it is having one of its best profit years ever, Duffey said. It tentatively plans to build another 80 homes next year, bringing it back into its traditional range of 65 to 80 homes per year.

"To be able to go back, after all the news that's been in the paper and all the stuff that's been going on in the market, to be able to project doing 80 starts - we have no problem with those numbers," Duffey said. "No problem at all."

Palmer's pullback in production goals has been mirrored by its competitors.

Renaissance Homes, an upscale Portland builder that made its first moves into the Bend market last spring, quickly brought 58 houses out of the ground as the spring sales season got off to a hot start, company President Randy Sebastian said. But investors, speculators and second-home buyers bolted from the market early in the summer, forcing Renaissance to slow up while it reconnoitered the playing field.

The company still has more than 30 homes for sale in its Renaissance Ridge development in southwest Bend, Sebastian said.

Most of Renaissance's 20-or-so sales have gone to local move-up buyers, not to the second-home investors it thought it would be selling to when the year began, Sebastian said. It has cut prices anywhere from $80,000 to $160,000 per home to get things moving again, with some recent successes - six homes have sold in the last two weeks.

Still, the company has cut 70 percent out of its aggressive early year production goal, Sebastian said, leaving somewhere in the range of $45 million to $50 million in potential construction money unspent.

At least, not yet.

Renaissance is planning to stick with the Bend market for the foreseeable future, Sebastian said, even laying plans for a new 80-home subdivision along the Deschutes River to go along with Renaissance Ridge.

"The good news is it'll happen," Sebastian said. "The bad news is, it didn't happen this year."

The same is true at WoodHill Homes. WoodHill plans to break ground on at least two major new Bend subdivisions later this year, President George Hale said, but it has cut this year's building projection from 120 homes to 80, cutting $7 million in spending in the process.

The slowdown may have some silver linings.

With better sales tracking and tighter business management, builders appear to be reacting quickly to the unusually sudden slowdown in sales, apparently avoiding their propensity through past drawdowns to keep building until inventories reached disastrous levels, said Harold Guthrie, an owner of Bend-based electrical contractor THT Electric.

"It doesn't catch people as off-guard as it did in the past," Guthrie said. "There's not quite the cowboy attitude that there used to be."

And going forward, local lower-end buyers may catch a break as builders adjust to a more locally oriented market.

Last year's red-hot sales were fueled by investors and second-home buyers that accounted for as much as 40 percent of a typical builder's sales, Hale said, forcing prices upward and enticing builders to construct more expensive homes to meet the demand.

With the investors greatly reduced or gone, though, Hale and Duffey said their companies are searching for ways to bring lower-cost homes to the market next year, trying to get their price points down to the point where entry-level buyers can have a shot at them again.

There have been some mixed signals lately in the national real estate news. New-home sales rose 5.3 percent in September, but the increase was driven by heavy price cutting. Existing-home sales dropped for the sixth straight month, while mortgage interest rates hovered at a relatively low average of 6.39 percent.

Meanwhile, with uncompleted homes still left to finish this fall and with Central Oregon homes still selling at the relatively strong levels of 2003 and 2004, there have been few signs of out-and-out financial distress so far in the local subcontractor community, Hale said.

But plumbers, framers, drywallers, electricians and finish carpenters are a good deal easier to book this fall than they were in the spring, and, with more than 1,400 homes still for sale on the Bend market, leaner times may still lie ahead for some.

"In these times, the cream rises," Hale said. "The guys who were really good get better, and the guys who were really kind of marginal find other things to do. It's kind of uncomfortable for most people to go through these days, but I don't think it's a bad thing."




Tuesday

Top 7 Tips for Great Customer Service

Every company talks about and promises great customer service. But to survive and grow a business, it's so important to actually practice excellent customer service. It's how a company is remembered, which generates word-of-mouth viral advertising for your business. Here are some tips to making sure homeowners and business owners remember you and your service:
  1. Calling your clients when you say you're going to call them, even if it's to say you don't have time to talk and to set up another time to call. Also, it's important to be available to take their call when they say they will call you -- even if you're not immediately available to take the call.

  2. Make sure your clients know how to contact you. Giving them your answering service or a number you won't be near is not good customer service. Make sure the client has options to contact you: your office number, your cell number, and your email address. This way, they know you'll be there for them. Just don't let them take advantage -- let them know when it's appropriate to use your cell phone, for example.

  3. You're in business to make a profit. But if you can save your clients money, always make an effort to point out where they can save some in the process... and not just where you will save. Giving strong financial advice to your clients will allow them to trust you and, more importantly, return to your company. They will also be willing to give valuable referrals.

  4. Problems arise in every building, remodeling, or repair project. When you see a problem coming, let your clients know about it. By preparing them for any situation, it will ease the impact and prevent them from wanting to blame you for it. Many tend to avoid complications until after they've happened and sometimes when it's too late to give a client any options.

  5. Always try to give options for any challenge or for any opportunity. By stating there is only ever one way to do something limits the chance for change and improvement. Giving options also allows your client to be able to make a decision and be a part of the process. Even if the other options are bad ones, you're giving the client the chance to see that your way might be the best way. If they only will take a bad option, let them know you'll have to amend your contract to ensure they realize it's truly a terrible idea -- and to remove blame from your company.

  6. If you make a mistake, accept fault for it. It's a tough pill to swallow, but it will help you and your company in the long run. It might even cost you money, but if your client is satisfied with your work after you've made corrections it could mean more business later. Everyone is human and mistakes happen. Taking responsibility is the right way to do business.

  7. Follow up with your clients. It cannot be stressed enough. Always call on previous clients to make sure to thank them for their business. You want to make sure they're happy with your work and that there are no problems. Many times, they may be unhappy about something but it turns out they are doing something wrong. This could remove blame or hurt feelings. Use a follow up as a time to talk about special upcoming promotions and specials or to ask for referrals.
If you're not already a member, you can register your company for free with Construction Deal to review local job leads. If we have enough leads for you, in your area, you can become a subscribed member today!


Sunday

"Lumber Sales have Declined 15 to 20 Percent"

The Daily News reports from Massachusetts. "Home builders in MetroWest are re-evaluating the real estate market now that housing prices are decreasing, adjusting marketing tactics and even delaying construction to wait out the cycle. The inventory is increasing because prices are too high, said Laurie Cadigan in Concord, who is president of the Greater Boston Association of Realtors."

"'It takes sellers about six months to catch up to buyers' expectations,' Cadigan said. 'Sellers looking to sell at last year's prices aren't going to be happy.'"

"Framingham Acquisition LLC changed plans for its 290-unit Arcade project in downtown Framingham because the condo market softened, according to Michael Gatlin, an attorney for the developer. The original plans called for condos to be built in the building but the units were later changed to apartments."

"'When you do any kind of project like this, you have to justify it to your lender, the prices you're getting for the units,' Gatlin said. The developers 'found that there were some condo prices that were soft and it seemed like a difficult market to justify to a lender.'"

"'Toll Brothers Inc. is building an over-55 development in Marlborough, called the Regency at Assabet Ridge. The developer is using a different approach to moving its homes: getting them on the market as soon as possible, according to Jason Witham."

"Builders creating more homes for the market are creating even more supply, according to Terry Egan, editor-in-chief of the Warren Group. 'Any new home built that comes on the market right now is facing a lot of competition,' Egan said. Not only from other new homes but from an expansive supply of existing homes for sale."

"'Right now, buyers have clout that they haven't had for a long time in Massachusetts. They're driving hard bargains, and it's something developers are aware of,' he said."

"Lumber yards that supply home builders have also been affected by an increasing supply of homes and downward pressure on home prices. The cost of lumber has declined $35 per 1,000 square feet of board according to David Lamson, chairman of Lamson R.S. & Sons of Hudson. He said it's because developers aren't building as many new homes."

"'They are not building as much, and they don't have the demand,' Lamson said. 'There's a glut of houses on the market right now, and all our builders are cutting their prices for the houses to move them. Most every builder has got houses in inventory.'"

"Lumber sales have declined about 15 percent to 20 percent in the Northeast, and particularly in Massachusetts this year, he said."

Is your construction company shifting from new home construction to remodeling? Find local job leads at Construction Deal today.


Friday

Economic Growth Slowed in 3rd Quarter

From KGW.com "WASHINGTON, D.C. - Economic growth slowed to a crawl in the third quarter, advancing at a pace of just 1.6 percent, the worst in more than three years.

The latest snapshot of the economy, released by the Commerce Department on Friday, showed that the slumping housing market figured prominently in the economy's dramatic loss of momentum. Investment in homebuilding was cut by the biggest amount since early 1991. many economists were forecasting.

"The housing bubble burst and that really knocked down growth," said Joel Naroff, president of Naroff Economic Advisors. The third quarter's 1.6 percent growth rate was the weakest since the first quarter of 2003, when the economy grew at a 1.2 percent annual rate.

Spending on home building dropped at a rate of 17.4 percent in the third quarter. That was the biggest drop since the first quarter of 1991 when such spending was sliced at a 21.7 percent pace."

Building Permits Down in Some Areas

From the Oakland Press: "The number of permits issued for new Oakland County homes dropped by 51 percent in the year's first three quarters vs. that period in 2005 - a decline slightly greater than that of Southeastern Michigan as a whole.

Builders were issued 1,690 permits for Oakland County projects from January to September this year, according to Housing Consultants Inc., a Clarkston company that tracks those permits. That compares with the 3,446 issued to builders in the first nine months of 2005.

The totals exclude permits issued for rental units.

In Southeast Michigan's nine counties overall, builders got 8,256 permits from January through September. That represents a 46.3 percent dip from the 15,362 permits issued in that period in the region in 2005.

The region includes Oakland, Wayne, Macomb, Washtenaw, Genesee, Livingston, Monroe, St. Clair and Lapeer counties.

"Things have slowed down a lot," acknowledged James P. Babcock, president of Babcock Building Co. Inc. in St. Clair Shores and of the Building Industry Association of Southeastern Michigan. "We're hearing that from all our members. I think the affordable homes are still selling."

New builds priced at less than $200,000 - those that some first-time buyers can afford - are faring better than pricier homes, he said.

"Once you're in a move-up market, things have slowed down because people can't sell their existing homes," he said.

The weak housing market is tied to Michigan's sluggish hiring climate. Foreclosures have worsened the situation.

Michigan reported 7,846 properties entering some stage of foreclosure in September - a 14 percent increase from the previous month and nearly three times the number reported in September 2005. That's according to RealtyTrac based in Irvine, Calif. With one new foreclosure fi ling for every 538 households, the state has the third-highest rate in the nation, behind Colorado and Nevada.

"If (lenders are) selling a home for 80 percent of what a builder sold it for two years ago, how's the builder going to compete with that?" Babcock asked.

In the region, Genesee saw the greatest decline by percentage - 59.5 percent - as the number of permits issued in the first three quarters dropped to 595 from 1,470 in 2005's comparable quarters. Monroe saw the smallest percentage dip - 26.5 percent - as permits fell to 429 in 2006 from 584 in 2005.

Macomb County led the region in permits issued in 2006, with 1,962, followed by Wayne, with 1,838. Oakland County was third.

Only two Oakland County communities were among the top 10 in the region in terms of number of permits issued. Lyon Township was sixth, with 245, and Novi was eighth, with 215.

Macomb Township was the community with the largest number of permits issued in 2006 - 549. Detroit was second, with 471, but 281 rental units were included in the total.

Builders are now in "hunker-down" mode, Babcock said.

He said he's heard of builders who are considering leaving the state or getting into a different business.

"It's harder to make a buck as a builder," he said. "I don't know when it's going to turn around - maybe after the election."

Thursday

Update: We've Added a Financing Option for Homeowners!


We wanted to let our network of Contractors know that ConstructionDeal.com has added to our growing list of services for homeowners! We have partnered with a major home loan company to help make sure those who use our site have access to financing for their projects.

When the homeowners place their home improvement jobs with Construction Deal, they'll also be able to apply online for a home equity or homeowner line of credit to help pay for their construction, remodeling, or major repair project.

Our goal at Construction Deal is make sure the consumer is able to complete their home improvement project. And it can also make sure they have their financing and budget in place before you begin working with them.

Please visit the Construction Deal Lending Center for further details!



Tuesday

New Home Construction Reports - October

Some housing bubble reports from Wall Street and Washington. "M.D.C. Holdings Inc. reported third-quarter net income fell 60% as profit margins narrowed in more competitive markets and home orders plunged 40% from a year earlier. The 'operating environment in most markets became increasingly competitive in the face of continued expansion of unsold new and existing home inventories,' said CEO Larry A. Mizel."

"Margins thinned particularly in California, Nevada and Virginia, M.D.C. said. In the third quarter the company said it booked pre-tax charges of $29.4 million for inventory impairments and project cost write-offs."

"'Builder concessions and incentives continue to rise,' said CEO Mizel. 'Confronted with expanding inventories and increased uncertainty, many buyers displayed a wait-and-see approach to purchasing a new home.'"

"'M.D.C. said home orders in the third quarter fell 40% to 2,120 from 3,551 in the year-earlier period. The cancellation rate jumped to 48.5% from 25.7%."

"'We expect cancellations to remain high as long as home prices deteriorate,' wrote Banc of America Securities analyst Daniel Oppenheim. 'We believe land impairments will likely continue and increase from the $19.9 million charge in [the third quarter] due to the relatively young age and geographic concentration in stretched markets of the company's lots supply,' he added."

"Homebuilder Technical Olympic USA, Inc. reported consolidated net sales orders of 1,470 for the quarter ended September 30, 2006, a 19% decrease from the... quarter ended September 30, 2005. Joint venture net sales orders for the third quarter of 2006 were 125, an 86% decrease the third quarter of 2005."

"TOUSA's consolidated cancellation rate was 33% for the third quarter of 2006 compared to 20% for the third quarter of 2005. TOUSA's combined cancellation rate for the third quarter of 2006 was 44% compared to 18% for the third quarter of 2005."

"The Company anticipates a pre-tax charge in the range of $35 million to $48 million for the third quarter of 2006 related to land deposit write-offs and asset impairment charges."

Thanks to Ben at The Housing Bubble Blog for gathering the information.


Friday

New Commercial Categories Added

Contractors! ConstructionDeal.com has begun implementing commercial categories into our system. And since our goal is to help your business succeed, we're expanding our listings to include categories in Construction, Remodeling, and Repair & Maintenance. Many of the members in our network requested the addition of these commercial categories and we, at Construction Deal, have listened! If your company does commercial jobs, you can add those categories to your Construction Deal account today!

If you are a subscribed or registered member, you can log into your account and update your preferences to make sure you will receive job lead updates. On your "Lead Page", click on Preferences, and then click edit under the "Serving Categories:" section. Check off all the commercial categories that apply to your company! Simple as that!

Note
: You may notice that some categories have already been checked for you - that's because we added them to your profile if you also do similar residential work.

If you have not registered for free with Construction Deal, this is the perfect time to become a member! With new commercial construction, remodeling, and repair jobs, we'll have more leads to offer to your company! We will continue to provide new services to help your company grow and prosper.

At this time, there is no extra charge for being added to our commercial construction job categories so feel free to select all the new services that apply to your business. Once we've updated our site, we'll begin marketing for commercial leads, and you'll see many new jobs being posted!

If you don't see a category that corresponds to your specialty, let us know today!