Charles Cork is gearing up to do something he hasn’t done in four years: Build a $1-million house “on spec.”
“I don’t think getting a client for this one will be too much trouble,” said Cork, principal of home builder Braxton Homes in Scottsdale, in the Phoenix area.
His willingness to build is a sign of the confidence being shown by many home builders in the United States as the housing market continues to show signs of recovery.
On Friday, jobs figures for February showed that there were 48,000 construction jobs created in the month, the most since March 2007, which was around the time the U.S. housing boom began to turn into a bust. In January, government data showed the biggest jump in new home sales in 20 years.
Before the bust, Mr. Cork typically had three houses in the $4-million (U.S.) price bracket under construction at any one time in tony Scottsdale, outside Phoenix. The last time Mr. Cork gambled on building a home on speculation – without a pre-contracted buyer – was 2009.
Since then Mr. Cork, who had been in the luxury home business since the 1990s, has been riding out the housing bust and the recession doing remodelling work for “survival” in the Phoenix area, where home prices cratered by more than 55 per cent between the summer of 2006 and September 2011.
“It took a while for people to have confidence that it’s not going to get worse,” Mr. Cork said. “In fact they are now thinking that maybe they ought to do something because it’s going to get better. It’s the same old thing, when it’s going down, nobody wants to buy, when it’s going up, everyone wants to buy.”
By the end of 2012, housing prices had rebounded by nearly 25 per cent in the Phoenix area since the bottom was hit in September 2011, according to the latest S&P Case-Shiller data.
The construction industry was particularly hard hit by the recession, tied as it was to the housing bubble.
Roughly 8.8 million U.S. jobs were lost between the peak in employment in January 2008 and the start of the job market’s recovery in February 2010, and more than one in every five jobs lost was in construction. In fact, the recession in construction employment struck earlier and lasted longer, with roughly 30 per cent of all construction jobs lost in the four years from January 2007 to January 2011.
The comeback in construction is not focused just in the areas where the housing bubble was most pronounced. It’s also in new boom towns spawned by the rapid growth in domestic oil production – places such as Williston, N.D., where 40 workers have been on the clock building the Dakota Landing hotel since October.
The 240-room hotel is slated to open in July, and builder Burke Construction Group Inc., which is managing three other projects in the oil boom town, is already bidding to build a new bank and several new apartment buildings, as well as expand the local fire department.
“I just think this boom is going to keep going,” said Burke’s Kim Hale, superintendent at the Dakota Landing site. Mr. Hale, a Chicago native, was out of work for more than three years when the construction industry was broadsided by the recession.
Last year Mr. Burke came calling, offering him a position managing breakneck building growth in North Dakota’s oil patch. Though he gets home to Chicago about once a month, Mr. Hale said he’s focused on the immense workload on his plate.
“I’m here until I get fired,” he said.