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A construction worker begins framing houses Friday in Galt. Recently, there has been a slowdown in building new homes in the area. (Brian Feulner/News-Sentinel)
Builders feeling pinch of housing slowdown
Permit numbers down sharply in region
Three years ago, builder Tom Doucette was "moving at 100 miles per hour" trying to keep up with the demand for new homes at his project sites.
Potential buyers were "camping out" at his FCB Homes subdivisions, hoping to snatch up a piece of real estate at the peak of the housing boom.
Business is no longer a blur for Doucette.
He and other local home builders are still making and refining future home plans.
But actual construction has slowed dramatically.
In Lodi, for example, the number of building permits issued for detached single family homes has plummeted from 396 for all of 2005 to just 18 so far this year, according to city records.
Countywide, the drop has also been considerable. There were 878 permits issued this past fiscal year, compared with 1,173 during the 2005-06 fiscal year.
And in Galt, permits have fallen from 179 in 2005 to 38 so far this year.
Doucette, FCB's president, said the housing slump hasn't caused his company to cancel any of its future home plans. The Stockton-based builder won approvals for more than 2,100 new homes on Lodi's west and southwest sides this year and last.
The slump has, however, caused his company — and others throughout the region — to shift to a lower gear.
"We are going forward with them, but clearly, in the current market conditions, we are preparing that the projects will be slower," he said.
Construction on a few new homes has begun on Kost Road in Galt. (Brian Feulner/News-Sentinel)
There's no precise building schedule for Southwest Gateway or Westside, FCB's two large Lodi projects. Doucette is working with the city to "fine tune" a bevy of sewer, water, road, lighting and landscaping plans, he said.
"We're hoping the market will improve," he added. "Precisely when, and when we'll start (building) we haven't decided yet."
The housing downturn has caused builders like FCB Homes and many others to scrutinize their building timelines.
Some, like Tokay Development of Lodi, have shifted away from the mainstream building model altogether.
"My particular company has looked at the high luxury end," said Jeffrey Kirst, the company's president, noting Tokay has been looking in that direction for about three years.
"That market doesn't seem to be having as much of a slowdown," he said.
The company plans to build homes on 29 large lots at Windwood Estates, a Woodbridge subdivision that recently gained approval.
Along with the high-end market, Kirst said smaller homes for aging Baby Boomers could see growth. Offering greater amenities inside those homes could still attract a lot of buyers.
Kirst said the picture might not be as bright for mainstream builders.
He said he wouldn't be surprised if some of the larger local developers are forced to "spin off" some of their lots to larger home builders, who can better weather the housing downturn.
"It's had an extreme affect on all of them because of the build-up (of homes for sale) and the lack of demand," Kirst added. "It's hurt a lot of builders."
The shaky housing market has led Lodi builder Dennis Bennett to build only pre-sold homes. That's provided his company, Bennett Development Inc., with greater security, but hasn't added to Lodi's housing stock.
All of his projects are being built outside the city, in places like Merced, Tulare and Ceres.
Overall, Bennett said his company has reduced new home construction by 50 percent compared to just a couple years ago.
"We're doing significantly less construction because (home) sales are down significantly," he added.
Bennett, who started his company in 1977, said there are a number of reasons for the building slowdown.
The media should take some blame for continuing to highlight the trend, he said. Large, corporate home builders are also part of the problem. They've flooded regional markets with new homes creating "huge inventories." That, in turn, lowers sale prices for smaller builders.
While his company offers "all types of amenities," Bennett said that's not the way to turn the market around.
And coming up with new, innovative home designs won't do it either.
"I don't think redesigning the product is the way out of our current dilemma," he said.
Builders and those close to the industry say the downturn is not a surprise, and the business is cyclical.
Few predicted when the market will turn.
Doug Kuehne, who reviews building projects in Lodi as a city planning commissioner, said local builders have kept busy in recent months gaining city clearances for their future homes.
"I think if they're smart they'll continue to lay the groundwork for future projects and they'll be ready to go (once the market turns around)," Kuehne said.
Bennet said new construction won't boom again until the "huge inventories" of homes for sale are bought up.
Easing some of the recent mortgage restrictions and offering federal relief to those with expanding subprime mortgages might be two ways to bring buyers back, he added.
"If we get a little relief from the lending side of the business, hopefully that will help the inventory out there," Bennett said.
He noted that this is the fourth housing slowdown he's seen since starting work in the '70s.
For FCB president Doucette, this year's home construction hasn't come to a complete halt. The company recently developed 325 lots at its Westlake project, off Eight Mile Road near Lower Sacramento Road.
More than half of those lots now have homes on them. But the company won't build their full allotment of 800 homes at the site as quickly as first projected, Doucette said.
As for the homes that are being built at Westlake, Doucette said they'll offer this year's choosey buyers more amenities than ever.
They'll have more "entertainment niches" built throughout the house, and the latest wiring for Internet and television hook-ups, Doucette said.
They'll also feature the latest and most energy efficient appliances. Many of the new homes will also include more square-feet, albeit on smaller lots.
"From our standpoint, you could compare it to an iPod or a car," he said. "Every year they get a little sleeker or feature-rich."
Contact reporter Chris Nichols at chrisn@lodinews.com.
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