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A Look Ahead . . .

By George Schmok

I went to a "Meet the Builder" event on July 12, produced by the Southern California Building Industry Association (BIA). At the meeting, attended by about 200 service and product suppliers, there was some very positive chatter, a few moans and groans, a lot of hope for change and a prediction of a bit of a lull before the turn around kicks in.

We saw several landscape architects, landscape contractors, fence suppliers and the like standing in front of the horizontal purchasing sections of about 25 major area homebuilders. While the conversations were all tempered with the acknowledgement that times were better in 2007, for the most part the landscape architects and contractors were busy lobbying for work, which seemed on the very near horizon.

One landscape architect was happy to be in the bidding for the California speed rail project, even if the work was controversial and may get side tracked before it is straight tracked. Another was talking about projects with builders and engineers; others were in various stages of subdued optimism.

The landscape contractors we spoke to also seemed to be busy, with plenty of projects in the works and a fairly steady workload.

Now it could be that the ones we saw were the ones who were being active in the industry. It is always better to put yourself in front of the clientele rather than wait for the phone to ring. But the builders were also talking positive and hoping the upcoming elections will produce positive change in the minds of the consumers, land owners and the business world.

According to a fence contractor, whose division supplied temporary fencing to new developments, his business was ahead of the curve. He indicated the first half of 2012 was great for his division, meaning that there were plenty of new starts across the southern California landscape.

Almost all the builders were building and selling new homes; some at breakneck speed. One builder said that since January, new home prices were steadily climbing and have increased as much as 10% this year. The builder indicated he was getting "same-day" offers and was even able to wait and accumulate several offers on a property, something that had been out of the question over the past few years.

Still, there were three forces that caused concern in the eyes of the developers. One was the overall uncertainty about the elections, and whether there would be huge tax increases or a more business-friendly environment in 2013. Another was the number of homes being held by banks waiting for supply to fall and prices to rise. The third was the lack of available property to develop, as landowners are waiting for the elections and for prices to rise before letting property go for development. The positive side of this . . . at least in Southern California . . . is as land that is currently being built continues to sell, supply of new homes is going to decrease as developers must first find, permit and prepare new lands for development before beginning to build again. This will give the banks time to introduce their supply in 2013. This will help deplete the excess inventory and cause developers to bid and pay more for land. Thus, the housing recovery, given that no more radical change inhibits growth and confidence, is on the horizon.

So as you develop your business plan for the next 18 months or so, there is still time to get in some new residential work, but watch for a lot of renovations in 2013, and an opportunity to get in on the ground level of projects for 2014 . . . Granted this is just Southern California, but over the years So Cal has been a good indicator of what to expect in the construction industry. Let's hope history stays on our side . . .

God Bless . . .

George Schmok, Publisher







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October 20, 2019, 5:51 pm PDT

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