Jersey Slowdown Gaining Momentum

From the Press of Atlantic City:

Slower housing market means fewer demolitions

As tourists stow their beach bags for another year, Ocean City is getting ready for the launch of its second industry: teardowns.

Builders say they are seeing a dramatic slowdown in home construction on the island, reflecting a national trend. That could spell fewer demolitions, new homes and jobs on the island this fall.

“Our busy season usually starts in the fall. I hate to say it, but it's not going to be half as busy as past falls,” said Mark Tietjen, manager of Peter Lumber in Ocean City.

The New Jersey Builders Association said the number of home starts is down 15 percent statewide over last year.

“The slowdown is gaining momentum,” trade group spokesman Patrick O'Keefe said. “The watchword in new home construction is inventory management. Builders are not starting units unless they have firm commitments of sale.”
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Ocean City builder Halliday Leonard has seen its workload drop off considerably. The company had 80 jobs lined up last fall. It has fewer than 20 planned for this fall.

“I haven't seen this kind of slowing in 16 years,” builder Scott Halliday said. “We're seeing a steep decline in the number of homes under contract or demolished.”

“They're doing 30 percent of the volume of a year ago. I think that's consistent with the information we're getting with building permits,” Mayor Sal Perillo said.

“In the housing market, you have people … betting that by the time the property is completed, it will be worth significantly more than when they started construction,” he said.

But these speculators no longer make up a substantial part of the new construction market.

“They're all owner contracts, not speculator contracts,” Halliday said.

As a result of the slowdown, his building company plans to give fewer jobs to subcontractors.

“We're going to do a lot of the work ourselves, keeping the work in-house,” Halliday said.