Flynn's Harp: Builder exec has cautious optimism about recovery (1-27-10)

Although his homebuilders organization had what amounted to its “worst of times” during its Centennial year in 2009, Sam Anderson says conversations with his peers from around the country at a national gathering in Las Vegas last week “made me feel like my life is great.”

That a slight overstatement, perhaps, as Anderson guides his Master Builders Association of King and Snohomish Counties (MBA) into its second century with a cautious sense that the economy is on an upward trend.

Just back from the International Builders Show in Las Vegas, the MBAs executive officer says he agrees with speakers who suggested that a slow turnaround is beginning.“It won’t be a strong recovery but it’ll be a recovery,” Anderson said. “But until the credit markets loosen up, we’re not going to see much homebuilding.”

I asked Anderson to give me a sense of how bad a Centennial year it was for the nation’s oldest and largest homebuilders organization, and he candidly ticked off the facts: the economic crisis has cost the MBA 800 members, forcing a 26 percent cut in what was a $10.5 million budget. He cut eight employees and restructured three departments.

While Anderson’s organization, which is a trade association of homebuilders, remodelers and associated businesses, is dramatically impacted by what the recession has done to homebuilding, he says those conversations with his peers in Las Vegas put a different spin on how we’re doing compared with other regions.

“Take one example: we went from 18,000 permits a year to 5,000 in our two counties,” Anderson said. “Atlanta metro went from 60,000 permits to 6,000. And that’s mirrored in Las Vegas, Southern California and Florida.”

Despite the gloom surrounding their homebuilding business, the Master Builders carried out an array of Centennial-related events last year, fulfilling the mission Anderson carved out for the group when he assumed the leadership of MBA just over a decade ago. That mission has been putting a focus on good-citizenship for the organization and its activities.

Thus the MBA last spring undertook 100 community services projects, one for each year of its existence, and in addition built a wet lab at the Mercer Slough Environmental Learning Center. That project will be certified as Built Green pilot for light commercial construction and the MBA is donating it to the learning center “to help current and future students foster a connection with the natural world.”

Looking ahead, Anderson sees one near-term concern looming. “The first-time buyer tax credit has been a boon, but nobody thinks that will be re-upped.”

Anderson describes himself as “a  very upbeat person” and he’s cautiously upbeat about one small package of possible relief forthcoming from the Washington Legislature, which is considering a bill that would change the time when builders pay impact fees from the start of the permitting process to when the home is sold. It would be a big thing for smaller homebuilders.

To help the average person understand what that means to builders, Anderson uses the example of one builder facing impact fees of $16,000 on each of 10 lots on which homes will be built.

“Most builders aren’t big enough to have $160,000 of ready cash, especially when banks can’t loan on the impact fees,” Anderson says, suggesting that the proposed relief could be the difference between survival and not for some builders.

Hearings are beginning on the proposed legislation, but while it’s difficult to see how lawmakers could have anything but a positive attitude about a move that could be at least a small boost for homebuilding, there’s apparently some opposition looming from school officials.

One of the possible challenges facing would-be homebuyers, if homebuilding doesn’t resume, is that “there’s zero in the pipeline,” Anderson noted. “Most cities have laid off their planning staffs, for example, and if demand starts to pick up, we won’t have enough supply. There’s not an oversupply of houses.”

“There has to be a concern that if demand starts to pick up, and we again get into multiple bids on houses because the demand is exceeding supply, the prices are going to climb quickly,” he added. That would be an incentive for people who can to get back into real estate to do so now, but not very good for buyers who will be looking during another price run-up.

In the decade since Anderson was lured away from the National Ski Areas Association where he was general counsel, chief lobbyist and second in command, he has created a “kinder, gentler” image for his two-county builders group and an image for himself as a housing proponent respected by local elected officials of both parties.

Meanwhile, Anderson grew the organization from an operating budget of $1.5 million to almost $12 million. Then the downturn began to take its toll.

He is going to have occasion to invest his stored up goodwill with elected officials in the coming months to ensure that legislative and governmental steps necessary to help restore the health of the collective homebuilding industry are kept in the forefront as decisions are made in Olympia and at the local level.