According to the Town of Truckee Building and Development office, 461 residential permit applications were submitted in 2005. Fast forward to 2007. Same town. Same city. Similar economy. The number? Try 121.
The numbers don’t lie. But they don’t tell the whole story. While building is down by approximately one-third and not expected to hike until 2010, it is, according to Mike Lavallee , Chief Building Official , ‘Not a dead market by any means.’
Builders site reasons specific to Truckee as part of the prohibitive nature of the industry at this time. Some of these include:
2005 Facility Impact Fee Raise: Implemented to the tune of $2,500. Smart builders dodged that bullet and submitted their applications ahead of schedule, knowing they still had 360 days to act upon their paperwork.
Bigger lots and bigger homes: To ensure the value of the purchase price, builders are fitting to size, meaning they are building larger homes as comparable to the price of the lots. More time on larger residential homes means fewer three bedroom, two-bath ‘knock-offs’ for contractors. Bigger homes mean more time, fewer permits and skewed numbers.
Recreation and Park Mitigation Fees for Residential: The number has increased from 40 cents per square foot to $2.22. That number is expected to double over the next two years.
Fuel Costs: Besides the added cost of delivering materials, our Bay Area second-home owners are re-thinking that $200 weekend drive.
Wild land Urbane Building Standards: There is a new list of approved products, which always means additional expenses, just in terms of building up your inventory. And while many of the products have been in play for some time, they won’t be officially adopted until July, indicating another slow-down for builders who want the facts laid out before they start construction.
The International Building Code: Adopted by the rest of the United States over the past nine years, it was accepted in January of this year in California. Which is why you see a huge number of residential permit applications in December 2007. This figure alone creates confusion, until you know the real deal. Building is not up. Permit applications are. Smart folks are getting the applications in before the International Building Code is implemented, anticipating (rightly) it is more stringent with inclusions usually reserved for earthquake zones.
School Mitigation Fund: This statewide tax collected by county building departments is expected to double over the next two years. Not prohibitive to the big builders in town, but any additional cost to the newly established, with fewer resources, means, again, less building.
It’s an Election Year: People are nervous, have a sense of uncertainty and, therefore, do not want to invest until things are stabilized.
The impact of rising construction costs and the resulting slow-down in building is not specific to Northern California and Nevada. Government projects across the nation, conceived when money from property, sales and income taxes were steady and interest rates low, have been put on hold.
On the up side, builders are still building – just not as many of them. The cost of lumber is down, and remodeling requests are up. People are using this time to invest and enhance their existing properties. Consumers are also being more discriminating about their choices of contractors, builders and craftsmen. The leaner market means reliance on service and product. It’s thin-out time. Long-standing reputations and resources are going to be the victor in this ‘slump.’
So go for it. Be imaginative. Need a new deck? New siding? The time is ripe.
