Attorney Scott Hildebrand introduced his boss, Sam Anderson of Master Builders, who has been at Master Builders since 1998. Scott established apparent credibility with a whopping two Rotarians by outing Sam as a “Duck.” Quack! He regained credibility with a few of us by stating that Sam is also an attorney.
Sam began with a description of who the Master Builders are: an organization made up of local homebuilders and all of the peripheral vocations that support the homebuilders. They were founded in 1909, and they are the oldest and largest local homebuilders’ association in the US. They have multiple roles. They work as lobbyists with state, county, and municipal governments to facilitate governmental action that helps them get homes built. They are also charitable in their activities. They do a very large number of projects to help various people in need, ranging from building hundreds of wheelchair ramps in homes of the disabled, to performing rehabs on residences for those who can’t afford it themselves.
They have a staff of 36 and an annual budget of approximately $6 million. After a brief guided tour of who they are and what they do, Sam spent the rest of the time giving us his perspectives on the economy and its impact on the housing market. He named it after the famous Clint Eastwood movie: The Good, The Bad, and The Ugly.
Sam Anderson, with President John Martinka.
Washington has been hit hard. “We have lost over 70,000 jobs in the construction industry in the past five years. Building permits per year have declined in Seattle from 22,140 to 7,400 in this recession. Housing prices have declined an average of 30%, which is rosier than most of the other states. Michigan housing prices are today the same as they were in 1985. The reason we performed better than other states like Michigan and California is that we didn’t experience the huge ‘run-up’ in prices just prior to the drop, and our environmental land-use rules slowed construction so that we didn’t have the same overage in inventory. Finally, banking rules in our state were more restrictive, causing fewer defaults than other states experienced once the recession hit.”
The bottom line: “We are hurting, but we are in better shape than many other states. We have a better overall economic structure; our future is brighter.”
There is still an ongoing battle with cities and counties to make it easier to build and sell houses. However, when the housing market collapsed, the city governments suddenly needed the housing industry because it is so vital to the tax base.
Sam Anderson talks with members after the program.
For every 100 homes built, there are 311 local jobs created and $18 million in income. That, in turn, generates $2.8 million in taxes and other revenue for local government. In other words, Sam declared, “The housing industry has been the ‘cash machine’ for the local governments. Because of that, government is now a partner: they need to have the housing industry succeed because that success will drive government success.”
The good news? In Washington, housing prices have stabilized. Bellevue houses can be built for $40 a foot. (It used to be $200 a foot.) Why? The guys who used to own the companies are now wearing the tool belts, and they are hungry for contracts.
Some of the challenges:
- Subcontractors. Nobody will help finance them. There is going to be a recovery, but Sam predicts not until 2014 or 2015. However, we are in the top 20% of states in our recovery to normality.
- Supply versus demand. There is a huge hole in the ability to suddenly build new houses once demand breaks loose.
- New lending rules require 20% down. Sam asserts that the interest rate isn’t the problem – the ability to qualify for the loans is the challenge.
- The uncertainty of the future of the mortgage interest deduction is causing consumer hesitation.
Despite all this, Sam remains optimistic about the future and his organization’s impact. He pointed out that despite the loss of over 1,500 members in his organization in the past two years, they are continuing their strong representation of their trade, and they are continuing to give back to the community to help those in dire need.