Utah is in the midst of its worst home-building constriction in nearly 30 years, according to the University of Utah's Bureau of Business and Research.
Residential construction in Utah is falling at a record-breaking pace, "as conditions have moved from an orderly correction to a serious contraction," said the bureau report, released Wednesday. The number of residential building permits for homes, twin homes condominiums and apartments declined 58.2 percent in the first quarter of 2008, compared with the same period last year.
The decline in the number of residential building permits ranks as the most severe quarterly contraction ever reported, surpassing the fourth quarter of 2007, which had a 53.4 percent drop, said James Wood, the bureau's director. Previously, the worst quarterly decline recorded in Utah was the third quarter of 1987, when new permit activity dropped 50.1 percent.
Many local contractors are feeling the hard times. Jeff Atkinson, a general contractor from Utah County, said that because of the sharp downturn, he and many others in the industry are finding themselves unemployed, with few prospects.
"I'm looking for work right now," he said. "I don't have a job. My company is gone. I've lost everything. Most of my subcontractors, and some I have never even heard of, call me on a daily basis looking for work."
Atkinson, who had been a general contractor for the past 10 years, said that until last summer, he and his partner built between 20 and 40 houses a year. Since then, he said, he has lost his personal life savings and maxed out his home-equity credit line to cover interest costs for the homes he and his partner had built, because those homes have not sold.
Meanwhile, he has been unable to find a job of any kind in the construction industry. He said his partner is in a similar predicament.
Tighter standards in the lending market have helped exacerbate the already bleak housing situation by dramatically reducing the ability for potential borrowers to qualify for home loans and absorb the excess home inventory. "It's obviously scared people from wanting to build any more," he said.
Atkinson said he and his former partner are still trying to sell three newly built homes for up to $120,000 below appraised value, just to cut their losses.
"We keep getting killed from interest, and there comes a point where you just run out of money, and you can't do it any more," Atkinson said.
Wood said that the weakest sector by far was new single-family homes, which saw a 65.2 percent decrease in building permits in the first quarter of 2008, breaking the 28-year-old record set in the second quarter of 1980, when new single-family construction fell by 56.4 percent.
Wood said no sector has escaped the downturn, as permits for twin homes and condominiums declined by 48.9 percent, with manufactured homes down 45.8 percent and apartments decreasing 18.4 percent.
Utah's first-quarter performance ranked fourth-worst nationwide. Only Rhode Island, Arizona and Illinois had lower residential permit activity during the first three months of the year, the report said.
That reality has given little hope to people like Atkinson, who worries he may now be forced to find another line of work.
E-mail: [email protected]