Building in a Slow Economy

Roof FramingAlthough many of you are still living with frigid temperatures and snow, spring is officially here and the weather will catch up with the date before you know it. If you plan to build this year, I hope that you have already solidified your plan and started to line up contractors. If not, there is still time and the overall timing may indeed be perfect.

One “good” thing about a slow economy is that there are lots of people, contractors included, looking for steady work. As such, you may have more opportunities to get a good price on your project. It’s quite possible that high quality contractors will be willing to lower their prices in order to stay busy. Don’t expect a half-off sale, because that’s not likely; however, discounted prices can still translate into major savings. Consider that the average home sale price in the US according to is roughly $152,000. Saving  5-10% would be a $7,600-$15,200 discount, and that is well worth it.

Building PermitThere is no question that people are looking for work, and there is also no question that the economy has slowed significantly, bringing real estate prices down with it. When comparing average home prices on, one can see that prices have literally been cut in half from February 2008 ($301,200) to February 2013 ($152,000). That drop in prices also translates into new construction as “new home starts,” a major benchmark of the overall economy based on new building permits, have continued to decline over that same time period according to the Commerce Department. If there are less homes being built, then there are less contractors with full schedules and more contractors willing to offer incentives to their clients in order to stay busy and keep their employees working.

Chances are that the top contractors in your area may not be handing out discounts because they are probably still doing just fine for business. When the economy drops and housing starts fall,  the top contractors tend to stay busy while those contractors who are already “scraping by” tend to go out of business. Those contractors who land in the middle are likely to make adjustments in order to stay in business. These are the ones you are after…the best of those, that is.

Straw Bale HouseThere is also an impact specific to those of us wanting straw bale houses. Contractors who might not otherwise be interested in building a straw bale house may be more intrigued in a slow market. After all, work is work, and a once preoccupied contractor may find his or her interest peaked by something new and exciting that might not have otherwise been on their radar. This brings me to an important point: make sure that your contractors are excited about your project. If you feel like you are dragging them to the job, don’t bother. If, however, they show up excited to be a part of the project, they will likely be a good addition to the job.

I’m not a fan of a slow economy, but I do see bright sides to the situation. If you have been thinking about buying land and/or building a straw bale house, now may be the perfect time to get started.

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4 Responses to Building in a Slow Economy

  1. aaron Mon, March 24, 2014 at 4:52 am #

    Andrew, I love what you do and how you do it, but why are you coaching people to try to get a discount on labor. I don’t know many people who say I want to be a carpenter some day so I can be rich. I do know that when workers feel there labor is valuable they work better and when they feel stretched thin they do inferior work. We are not doctors or lawyers, lexus does not make a lumber rack addition. In a field were so much relies on what can not be seen, when one misplaced nail or improperly flashed window can cause so much damage in the long run, what matters is your contractor is honorable and feels valued. This is the last place to save money.
    For the most part however, you are right on and I do appreciate all you do for quality conscientious construction.

  2. Andrew Morrison Mon, March 24, 2014 at 7:55 am #

    Hi Aaron. I totally understand your perspective and I appreciate what you are saying. Having been a professional builder for roughly 20 years, I agree with you when you talk about getting the best quality work done. As you mention, so much of a home is never seen once the home is completed unless something goes wrong so it is vital to get it done right the first time. That said, I am in the interesting position here at of counseling both builders and home owners, and as such, I have to find the balance between helping both of them do the best that they can. Just as I support builders building the highest quality job for their clients, I want to support home owners in getting the best job at the best price they can afford.

    I hope that my piece did not read in the light of trying to cut out a contractor’s feet, because that is certainly not my intention. I know, first hand, how much work it takes to be a quality contractor and how little the returns can be in perspective. What I was trying to discuss is that when the economy is slow, there are deals to be had, that’s all. This is true for buying a car, clothes, and a myriad of other items when the economy is slow or weak. The reason is that we all have to adjust our numbers in order to stay competitive. I’m not making an argument as to whether this is right or wrong, just that it exists and if a home owner needs that extra discount off of the “regular,” strong economy pricing in order to be able to afford their home, then they should take advantage of it. In the end, it helps even the contractor as the job will keep their employees working, their cash flow positive, and will create another opportunity for word of mouth advertising.

    I honestly appreciate the difficulties of being a contractor, so I hope this clarifies my approach and what I was trying to share. Thanks again for your feedback.

  3. John "JR" Rexroad Mon, April 7, 2014 at 2:10 pm #

    Great piece, Andrew. I don’t know if this is relevant (although it feels relevant), but I have a friend who’s an incredible cabinetmaker. Like, really beautiful, unique, top-shelf (so to speak), premier stuff.
    He lived in Idaho near the border of Wyoming and by reputation alone he started getting contracts from some very, VERY well-heeled types in Jackson Hole. They’d agree on a price and he’d do the job. Beautifully.
    However, when I asked him later if he was still doing work for wealthy types in Jackson he told me that he wasn’t. Several times in a row he’d finish the job and whomever’d hired him would find some nonexistent flaw, declare that he’d broken the terms of their contract and refuse to pay him. He could go after them legally but with their pockets so much deeper than his, they were betting that he wouldn’t- and they were right. He couldn’t afford it. These were people for whom the cost would be less than a drop in the bucket.
    From then on he stuck to the more financially middle of the road clientele and said that he’d gladly take a job for a more modest fee, do good work for good people, and leave with all parties pleased. I think shopping around for labor makes as much sense as shopping around for anything else, but Aaron’s right insofar as his assertion that truly talented subcontractors or craftsmen aren’t going to be bargain-basement. However, that’s no reason not to shop around for quotes!

  4. Andrew Morrison Sun, July 20, 2014 at 9:15 am #

    That’s sad to hear. Thanks for sharing.

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