Builders thankful recession passed by, anticipate growth

Local lenders, state and federal programs help mitigate downturn

Posted: Sunday, November 15, 2009

Local builders say their business is in a downturn, but not the depression that has hit their counterparts in the building industry elsewhere in the nation.

"We're on the way up out of the bottom of the recession, but we didn't hit rock bottom like they did elsewhere," said Russ McDougal, past president of the Alaska State Home Building Association and owner of Mac's Design & Construction in Juneau.

Local builders talked about the state of the industry, as that association and the Southeast Alaska Building Industry Association met in Juneau last week for its annual convention.

Some state and federal programs have helped mitigate the downturn in Alaska, but the role of top local lenders, such as the Alaska Housing Finance Corp. and local banks has played a big role as well, they say.

"We didn't have the foreclosures, and the devastation from bad loans," said John Wood, president of the Southeast Building Industry Association.

"We're fortunate that Alaska lenders didn't write subprime loans, and sell off their loans to these other companies that have had problems down south," McDougal said.

While building has been down in Alaska, programs like new state energy efficiency efforts have helped keep contractors busy, Wood said.

"The state of Alaska put up money for energy retrofits, that's been huge, that's kept a lot of builders busy," McDougal said.

While new doors, insulation, air sealing, heating systems or windows can save homeowners money in the long run, state incentive programs helped make them more affordable, he said.

"It's probably just enough incentive for people to do some things they were just thinking about doing," Wood said.

With start of new homes slumping, many builders and their suppliers have kept busy remodeling, including for energy efficiency, McDougal said.

"I've heard from the owner of a lumber yard that's been a big part of their business," he said. "If not for the news doors, windows, that sort of thing, their business would have fallen off substantially."

Builders said they expect things to pick up from here on out, with new employees at the Kensington Mine likely to be looking for houses and new state and federal programs underway.

A recently approved extension and expansion of the new home buyer tax credit is likely to boost sales, while Gov. Sean Parnell's new emphasis on maintaining state buildings is likely to put people to work as well.

Builder Alan Wilson said in contrast to some other places, Southeast's bankers have been lending responsibly and have money available.

"If you are a solid borrower, you aren't having any problems," he said.

Wilson said the only people he's heard of having difficulty are those seeking second mortgages and 100-percent equity mortgages.

"We can use our homes as credit cards any more, but that may not be a bad thing," he said.

Juneau and Southeast haven't had the declines in home prices that have plagued other regions, particularly in the South and the West, builders said.

While many local people have been holding off buying, it is likely that a stabilizing or rebounding national economy will release some pent-up demand, the said.

"We've got great interest rates, rates that I've never seen before as long as I've been alive," Wood said.

"We're on the way up from the bottom of the recession," McDougal agreed.

• Contact reporter Pat Forgey at 523-2250 or patrick.forgey@juneauempire.com.



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