Homebuilders Accept Work As Remodelers During Slump

Published 08-02-2011
By Dale Quinn
ARIZONA DAILY STAR

With residential construction having slowed to a crawl, no job is too small for Tucson homebuilders nowadays.

One local builder, for instance, Pepper Viner Homes, recently partnered with Native Tucson Builders, a company that specializes in renovating and upgrading existing homes. The financial terms of the partnership weren’t disclosed.

While Pepper Viner has seen its primary business decrease, Grant Lovallo of Native Tucson Builders said his company needed additional resources.

As homeowners realize it could take years for property values to begin increasing, they start thinking about making their home a place they’d want to stay for the long haul, Lovallo said.

“People are looking at their homes and saying, ‘I’ll invest my money here,’ ” he said.

Lovallo said he started looking for a company to partner with, and Pepper Viner provided a good fit. “I was faced with either having to staff myself up or find a partner,” Lovallo said.

Pepper Viner is expanding its business into remodeling as new-home construction founders.

This year it’s likely that no more than 1,700 permits for new-home construction will be issued in the Tucson area, experts who track the residential market say. By contrast, in 2005, when homebuilding peaked, builders took out more than 11,000 such permits.

Pepper Viner has seen a similar drop-off.

When the housing market was booming, the company had nearly 80 employees building about 280 homes per year, said Chief Executive Officer Bill Viner. Now the company is down to about 20 employees and will likely only build between 60 and 70 homes this year.

Pepper Viner isn’t the only company that’s seen its business model change as the real estate market crashed.

“It’s certainly a sign of the times when homebuilders are looking for continuing opportunities” outside their core business, said David Godlewski, president of the Southern Arizona Home Builders Association.

SAHBA doesn’t track exactly what types of new work homebuilders have taken on, but it’s clear that construction companies aren’t necessarily in a position to turn business away.

John Wesley Miller, a local pioneer in energy-efficient homebuilding, has launched a marketing campaign that proclaims there’s “no job too small” for his company.

Miller said people might not otherwise realize that his company will do just about any type of renovation or add-on.

With construction on custom homes “dead,” Miller said, his company would take pretty much any job, such as turning a carport into a garage, or adding an enclosed patio, or Arizona room, to a house.

Another local homebuilder, Miramonte Homes, has turned to a different side business – building luxury rental homes with attached garages. The company is building those rentals with a specific renter in mind – former homeowners who walked away from their homes and “strategically” defaulted, even though they could afford their mortgages, because their homes were worth less than what they owed on them.

For Becklin Construction, custom-home construction made up the bulk of business during the boom, said Richard Fink, a managing member of the company.

While Becklin always did renovations – usually on homes the company built – that wasn’t the primary source of work.

But with new-home construction at a standstill, Becklin now also does light commercial improvements to retail properties and apartment complexes.

Becklin’s website still features its custom-home building. But Fink said the company – which subcontracts out most of its work – hasn’t actually built a home in about a year. “We’ve gotten more into the remodeling business in the current marketplace.”

Copyright 2011 Arizona Daily Star. All rights reserved.

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