Home builders look for better year in 2004

Lagging into the homestretch, Northern Colorado single-family housing permits are shaping up to finish well below peak years seen in 2001 and 2002.

Updated to November, permit numbers show that 2003 will likely end on par with the paltry numbers seen in 1999 and 2000. With Weld County’s numbers on a steady increase and Larimer County’s equally steady decline, it’s that time of the year for industry pundits to look into their crystal balls and predict what 2004 holds for the industry that drives the region’s economy.

“My opinion is, the worst is behind us,´ said Bill Kish, vice president of Executive Homes Inc. Named Homebuilder of the Year 2003 by the Home Builders Association of Northern Colorado, Kish’s Windsor-based firm builds homes in Evans, Severance, Johnstown and Wellington.

“I don’t think we’ll ever reach the boom we had in the ’90s, but I think 2004 will be a happy medium between the boom years and the low point in the last couple of years,” he said.

More jobs, more houses

From Kish’s point of view, new commercial developments in Northern Colorado will bring new jobs, fueling demand for housing. “We’ve got the new hospital in Loveland, the bottle plant in Windsor, a lifestyle mall coming in somewhere, and the event center is a popular amenity,” he said. “It all means jobs.”

The biggest issue facing the home-building industry, Kish said, revolves around the future of House Bill 1161. Passed in April and known as construction-defect-dispute reform, the law established a process for resolving construction defects before homeowners can take it to court.

“Before the bill was signed into law, it was very difficult if not impossible for builders to carry insurance,” Kish said, adding that although it’s a slow process, insurance rates are beginning to decline.

“There are rumors of attempts to repeal that law,” Kish said. “It’s something home builders need to be aware of, and they need to lend support to keeping the law on the books, both in time and monetarily.”

For Michelle Jacobs, director of community affairs for the Home Builders Association of Northern Colorado, the biggest issue facing local home builders in 2004 involves a shift in building codes. By April, most jurisdictions in Northern Colorado will have adopted the 2003 update to the International Building Code, Jacobs said.

“It will provide more consistency with building codes from town to town than there has been in the past,” she said. “This new code is more user-friendly, and it’s self-contained ? meaning it includes mechanical and energy codes.”

Jacobs said she hasn’t heard of any builders resisting the switch, but added “there are some major changes, and there’s always a learning curve with that.”

While the number of permits dropped in the summer months — usually the industry’s strongest period — 2003 numbers are finishing much better than anticipated, Jacobs said.

“Peak numbers we normally see in July and August we’re actually seeing in October this year,” she said.

Strong second quarter predicted

Jacobs said she expects January and February to be slow — typical of winter months — but looks for a strong start at the end of the first quarter.

“2004 is going to be at least as good if not better than 2003,” she said. “But I do not expect to see a spike like we had two or three years ago.”

As far as hotspots for development, Jacobs said, she expects the southwest corner of Weld County to continue as a strong leader and Johnstown and Milliken in particular.

But Larry Kendall, chairman of The Group Inc. Real Estate, disagrees that southwest Weld will continue to see the rapid growth it has in the past.

“A lot of Weld County sales in the last four years were buyers from Boulder County and north Denver,” Kendall said. “With new developments closer to Denver and Boulder County, those ?drive-till-you-qualify’ buyers don’t have to drive so far.”

The new year will greet Northern Colorado home builders with even stiffer competition than in 2003, Kendall said. “The size of the market for new homes is staying relatively the same, but there are so many more builders chasing the same sale,” he said.

Competition is prompting builders to provide amenities in starter and mid-range homes, normally reserved for custom designs. “Buyers are getting more for their money now, and they’re starting to expect it,” Kendall said. “To sum it up in four words: good market, very competitive.”

John Giuliano, president of Loveland-based Giuliano and Father Construction Co., is admittedly not so optimistic.

“I think what we had in 2003 we can expect to have in 2004,” he said. “I don’t think it will be bad, but I don’t think it will be party city, either.”

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