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more photosEd Busch, owner of PGC Building and Design in Bend, has several projects in the works, including this remodeling job in Tumalo. He said his company’s on track to make more this year than 2006 and 2007, thanks in part to remodels. “From shelves in the garage to a Tour of Homes house if someone has a need, we service it, and it seems to be working.”
Photos by Melissa Jansson / The Bulletin
Housing slump? Not with custom projects, builders say
Though builders are in a construction bind, custom homes and remodeling projects may be giving them a much-needed boost.
By Andrew Moore •
The Bulletin
Published: July 20. 2008 4:00AM PST
Despite the recent downturn in real estate, some builders of custom homes in Central Oregon say business is good, at least for now.
Ed Busch, owner of PGC Building and Design in Bend, said he’s on track to make more money this year than he did in 2006 and 2007. Busch builds custom homes, including one listed for $1.7 million on Awbrey Butte that’s part of the Tour of Homes this weekend and next, but his company also does remodels, which is one reason he’s doing so well, he said.
“We try to service whatever someone’s needs are, from shelves in the garage to a Tour of Homes house for $1.7 million,” Busch said. “It’s more about if someone has a need, we service it, and it seems to be working.”
Busch recently broke ground on a custom home in Sunriver, has another one in the permit stage and plans to start another project in Spring River in the next three months. Busch said he has enough work to get him through next spring and he keeps hiring workers to help him through.
Still, the downturn has cut into some of his work. Busch said two projects recently fell through after the clients canceled their plans due to financial concerns.
Stricter lending requirements have eaten into people’s ability to borrow money to pay for projects, said Sander Culliton, who builds custom homes and is owner of Pacific Crest Building and Design. But for those with cash, it’s not an issue.
“Most of my clients (are) still building. They aren’t building off of construction loans; they have their own money,” Culliton said. “They have cash in the bank or the stock market.”
Culliton said his company is keeping busy, with a $1.5 million custom home he recently finished on Awbrey Butte, also included on the Tour of Homes, and another he recently started in Tumalo. Culliton also does remodels and, not surprisingly, he said, there has been a slight uptick in the number of remodel jobs he’s taken on, partly because, compared with moving, it’s a more cost-effective choice for some families.
The surprising thing for Culliton was not the real estate slowdown, which he said he knew would come, but the impact the related credit crisis has had on lending.
“As a builder, especially right now, when you try to get money, the lender says, ‘Oh, you’re a builder.’ It’s like a scarlet letter,” Culliton said.
The current economic climate means it can be a challenge for builders to get financing for their own spec homes, or homes built by builders speculating they will sell, Culliton said, so he’s focusing on picking up custom-home projects financed by homeowners. He has one custom home he plans to build in the spring and said he’s negotiating for others.
Approximately 80 percent of builders in the U.S. build fewer than 20 homes a year, said Mike Jensen, director of communications for the Central Oregon Builders Association. In some sense, all builders can be considered builders of custom homes, Jensen said, but they do differ from large-scale developers, also called production builders, who build entire developments.
Jensen said COBA has roughly 300 members. He was unable to say how many of those build custom homes.
This weekend’s Tour of Homes, which is organized by COBA, features a number of new and custom homes built by COBA members. There are 73 homes on this year’s tour, down from 82 last year. Jensen said the number of homes on the tour varies every year and that this year’s dip is not due to the real estate downturn.
Nate Powell of Powell Builders Inc. is one of 50 builders with a home on the tour. His home, in Bend’s Woodside Ranch development, is valued at $1.25 million and was built to a customer’s specifications.
Powell said the ongoing building activity, especially of custom homes, is attributable to homeowners with enough money to weather economic slowdowns and to retirees who have saved to build dream homes.
Powell said his business is good, at least through January, when he’s slated to finish two custom homes on Awbrey Butte and in Crooked River Ranch. After that, he doesn’t know what will materialize, but Powell said he can always go back to work swinging a hammer. He doesn’t expect he’ll have to, but he does think he will build less.
Before the real estate boom, Powell said, he built three homes a year. During the boom, it rose to five homes a year and peaked at eight in 2006.
“It’s getting back to normal,” Powell said. “You hear people saying how bad the economy is and, yes, it has dropped, but it’s more realistic now. We were going through an expansion and boom that I don’t think was normal.”
Bill Boos, a partner in Ridgeline Custom Homes in Bend, said his company has six local homes in various stages of construction — all pre-sold.
“As a builder here in Central Oregon, we are extremely busy,” Boos said.
Ridgeline also has a home on the Tour, a 2,000-square-foot property in NorthWest Crossing. Boos is finding customers are opting for smaller homes with quality touches.
As long as builders respond to what buyers want and work with them, there’s business available, Boos said.
“We never thought in our wildest dreams that we would be doing what we’re doing now,” he said.
Andrew Moore can be reached at 541-617-7820 or amoore@bendbulletin.com.
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