HomeMoney

Housing market downturn causes a ripple effect

Font Size:
Default font size
Larger font size

buy this photo Kenney's Delivery Moving and Storage employees Brian Spera, left and Mike Kletz, both of Bloomington, move a mattress into a box truck Monday morning outside 1515 Woods Avenue, Normal.The Pantagraph/STEVE SMEDLEY

BLOOMINGTON - As the housing market continues to struggle, Kenney's Delivery is basically along for the ride.

While business for the Bloomington moving and delivery company is not bad, Kenney's didn't hire replacements when two employees left because work wasn't there to support a full staff, said President Dave Barling. Truck drivers have moved fewer families in the past year, but the company also keeps up with jobs like delivering furniture for interior decorators, Barling said.

"We're trucking along," Barling said.

Times have changed, though, especially considering business was three to four times better at the start of the decade, Barling said.

"You can feel it a little bit … Last year wasn't as good a year as the year before," he said.

That sentiment can be felt throughout the housing industry as real estate agents and builders sell fewer homes. Twin City home sales were down 8.7 percent in 2007, according to statistics from the Bloomington-Normal Association of Realtors.

A ripple effect also moves past home sales to touch industries right on the edge of the real estate market, such as moving companies and landscapers. While employers might not be buried in work, a variety of different tasks at least keeps some industries above water.

Disappearing act

As for Kenney's, Barling has noticed a recent trend in people downsizing. Instead of getting "big moves" to four-bedroom, two-story homes, employees have moved people's belongings to smaller homes, apartments, condos or retirement villages, Barling said.

"You could tell it last year. The market's not there," he said.

New home sales declined 17.6 percent, following a 14.2 percent drop in 2006. Existing home sales fell 7 percent in 2007 from its record a year earlier. According to the most recent statistics, sales were down 23.3 percent in

the first month of 2008.

Barling notices a lot of new home construction in the area - but homes are empty.

Builders will build spec houses before a buyer has committed to the property, but that practice is tightening now, said Brad Ropp, president of the Bloomington-Normal Area Home Builders Association. The decline in home sales means tough time for builders and subcontractors, too, said Ropp, who's also the project manager for Johnston Builders in Bloomington.

If the number of homes built decreases, less work also is available for painters, roofers, dry wall workers and plumbers, Ropp said. Even warehouses feel the loss as demand falls for company supplies, he said.

"It kind of reaches out … (to) everybody down the line," Ropp said.

Changes at work

That includes landscape companies as well.

The large portion of business at Bloomington's Grieder Sod & Landscaping that involves sod work for new home construction has slowed, said General Manager Dale Palmer.

"Fewer houses - there wasn't that many yards to put in," Palmer said.

Nonetheless, Grieder made up for a drop in new home business with an increase in yard work in existing communities, Palmer said. Outside lifestyle features like patios, decorative walls, hot tubs, outdoor kitchens and fire pits are popular right now, he said. Palmer expects part of the increase in that industry's popularity comes from people who decided not to upgrade to a new home.

"Instead, they spruced up their existing house," Palmer said.

Even some builders began to add more to a home to entice a buyer.

In the past, Grieder's job simply was to sod a new yard. Since homes have sat on the market longer, a few more builders asked for extra landscaping or trees to give the home a little more curb appeal, Palmer said.

Those are similar to reasons why Dale Naffziger, owner of Bloomington's Growing Grounds, thought he might see a bigger increase in business in 2007. He figured people who wanted to sell their homes might visit the retail store for extra plants. He also watched to see if people might stay home and use money intended for a vacation on their yards instead.

He's not sure what impact, if any, those possible trends had on sales in 2007, though.

At one point in the year, tree sales were down and shrub sales were higher than usual, Naffziger said. When it was all said and done, Growing Grounds ended the year slightly better than the previous year, and he also expects a solid year in 2008.

What's ahead

Palmer hopes his workplace has been hit as hard as it's going to get. But since landscaping is the last stage of new construction, Grieder may not have seen the bottom of the new construction decline yet, Palmer said.

The moving business is still slow, even for this time of the year, Barling said. He's optimistic that business will pick up in the spring but recognizes it may not be as long of a busy season.

Grieder has some hints of a busier season to come outside of new construction anyway. The company has more work to do right now than it has in the past at this time of the season, Palmer said, though he expects one reason for the surplus of work on the books is because the company didn't work as far into the winter.

Still, Grieder is scheduled for a lot of patio jobs for later in the year, Palmer said.

And he also follows Naffziger's theory that people could spend less money on vacations in 2008 but put some of that savings into their homes.

"It's a hope of ours anyway," Palmer said.

Print Email

/business