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Stumblethe economy:
Centerpiece house for builders’ conference a no-show
Oscar Rugamas, left, and Elmer Lara of Alvarez Masonry place stones on the exterior of a New American Home on Jan. 8 at 2911 Bella Kathryn Circle. Lack of financing for the project, which was supposed to be completed for next week’s International Builders’ Show, helped drive builder Domanico Custom Homes out of business.
Fri, Jan 15, 2010 (3 a.m.)
A Las Vegas house has come to epitomize the struggles of the homebuilding industry.
For the first time in the International Builders’ Show’s history, the so-called New American Home, which depicts cutting-edge innovation and technology in the housing industry, won’t be open for tours when the show begins in Las Vegas next week.
In a scenario that’s playing out across the housing industry, the 12,000-square-foot home, a project of Domanico Custom Homes, couldn’t be completed in time because private lenders who were financing the project withdrew funding, said Mark Pursell, a senior vice president with the National Association of Home Builders, the show’s sponsor. The home, which is about 75 percent complete, was sold at auction in December.
It shows the banking industry’s reluctance to lend money for the acquisition, development and construction of homes and why the association has invited 20 financial institutions to the conference to meet with builders looking for funding, Pursell said.
“What happened here is symbolic of what is going on in the industry,” he said. “It is a very difficult environment to finance home construction, especially in Las Vegas, which is, if not the hardest hit market, certainly near the top.”
The financing problems proved to be the curtain call for Domanico Custom Homes, which has since gone out of business after 35 years, owner Ernie Domanico said.
The builder had 13 employees before Domanico let them go — quite a change from when the association selected him to build the showcase home.
“We were excited,” Domanico said. “We thought this would be a great stepping stone for our company. We were geared to do more work.”
Domanico said he has lost $8 million in the last couple of years, including more than $1 million on the New American Home. It has been frustrating because the company was 90 percent done with a 19-lot subdivision when financing was cut off. The builder needed only $700,000 to complete the infrastructure and have it ready to build custom homes.
“You can’t get any money right now,” Domanico said. “I had a good reputation, but nobody is taking a chance on Las Vegas right now. There are doctors who can’t get loans.”
Domanico said he’s relegated to buying bank-owned properties and fixing them up, but it’s nothing like the homebuilding industry, which he would like to return to someday.
“Some people are saying it will be another three to seven years before the homebuilding industry recovers in Las Vegas,” said Domanico, who won’t attend the conference.
The show kicks off Jan. 19 and runs through Jan. 22 at the Las Vegas Convention Center. The expected 60,000 conventiongoers should mirror the turnout a year ago, Pursell said. That is down from the peak in 2007 when more than 100,000 attended the show in Orlando, Fla., where it returns to in 2011 and 2012 before coming back to Las Vegas for a four-year run.
The drop-off in attendance isn’t surprising because the nation’s housing starts in 2009 were 550,000, about 25 percent of what they were in 2007, Pursell said. A lot of companies have gone out of business and many are sending fewer delegates, he said.
“We are pretty happy with 60,000,” Pursell said. “It is the value of the show and people realizing the housing market has bottomed, and they are looking for it to recover in the next 12 to 18 months.”
The show is attended by professionals in the homebuilding industry, which includes contractors, developers and remodelers. Suppliers and service providers also attend. About 1,000 companies will have exhibits, down from 1,500 in 2009 and the peak of 1,800 in 2007, Pursell said.
The show features 175 seminars on business management to help members increase business.
“People feel we have hit bottom,” Pursell said. “The market demand is out there. It is pent-up demand for housing somewhere around 1.5 million starts. We are going to have nice growth ahead, but the question is when will it start. There are some headwinds with employment and the big concern of financing for land acquisition, development and construction.”
The unfinished New American Home features a solar water heater, photovoltaic cells, a graywater-recycling system and hydronic air handlers. It also has an aerated flooring system to prevent moisture problems and ventilation to mitigate radon, volatile organic compounds and humidity.
Although it won’t be on display, the conference will showcase smaller, energy-efficient homes in the parking lots of the convention center.
Those homes have been the best-selling over the past 12 to 18 months because of strong demand from first-time homebuyers, Pursell said.
Discussion: 10 comments so far…
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i don't see wite worker there hey did they have there osha 10 classes
1. Where are the brick ties to help keep the adhered veneer from falling off in a quake?
2. That looks like scafolding on the right. Where are the hardhats for workers in the drop zone?
hmmmmm.
Will Alvarez Masonry please buy belts for their employees. Elmer is about to provide the "plumbers crack" for all to see.
I searched the Nevada State Contractors Board's web site and could not locate any information by searching for either the builder (Domanico Custom Homes) or the principle owner (Ernie Domanico) or the (sub-contractor (Alvarez Masonry, or Alverez Masonry or Alveraz Masonry). Could the reporter correct the spelling on these individuals. Was this builder and subcontractor licensed in Nevada?
AND when is the home building industry going to take its share of the blame for the drop in the Market? Remember when Pulte raised their home prices on their homes by 20% in one month ... That kind of raise usually took 5 years, but, because of their greed they put all homeowners at risk.. they kept raising their prices until they knew the market would burst..they have no place to call on lenders to come back into their cheating market place.
Maybe Ernie Domanico should ask a certain Federal Judge to force the banks to give him a loan or maybe even have the judge force someone to buy his home... the Judge would probably believe it is well within his scope or jurisdiction.
One of the problems is using substandard labor. and then trying to sell a $300,000.00 for over a million. The gravy train for these type of shoddy builders is over.
Perry -- does "wite" power make you a bigot?
mcmc_John, captainamerica -- contractor licensing, bonding, union membership, none of that has anything to do with quality of the work done. You're just buying into the police state's grab for power.
"We are fast approaching the stage of the ultimate inversion: the stage where the government is free to do anything it pleases, while the citizens may act only by permission; which is the stage of the darkest periods of human history, the stage of rule by brute force." - Ayn Rand (1905-1982)
I like the guy using his torpedo level as a hammer. Call Alveraz Masonry for all your out of level needs. XXX-XXXX
That picture speaks volumes. Illegal immigration has put this country on the brink of no return.
MR. KillerB.... I was a proud non-union contractor for over 25 years. But, I do not believe that any contractor can be part of the solution of the home building industry without obeying rules that help sustain the integrity and quality of home building, and integrity comes from obeying rules and quality comes from training and education of the workers.
I am afraid that we have reached "the stage of the ultimate inversion" that you posted about. We have government agencies that fail to keep the playing field fair or equal to all participants. We have federal judges who are writing laws from the bench and we have a flood of illegal immigrants that our politicians are catering to, and thus there are no rules any longer and "brute force" now exist.
It just so happens that brute force today is political force, and political force moves quicker than the earth did in Haiti. But, with the same devastation to life, liberty and personal freedom. Leaving no solid foundation for a people to feel safe under....and no authority to get permission from, thus we are paralyzed to do anything..AND that my friend is more crippling than needing to get permission to do something.
"...I do not believe that any contractor can be part of the solution of the home building industry without obeying rules that help sustain the integrity and quality of home building..."
mcmc_john -- no quarrel from me on this. But the degree of regulation as actually enforced represses the normal commerce between builders and their customers, particularly when it comes to the small contractors. I've seen fines and penalties in the 5-figure range for one small builder for what amounted workers who discarded their safety equipment when he was sick in bed with the flu. Because the state created this revenue out of thin air collection (by an employee hired from the debt collection industry) was far more aggressive than the situation warranted. Particularly since he didn't commit the violation and the fine was nearly as much as his previous year's personal income?
The point -- if I want to hire a particular craftsman to remodel my home, under the Constitutions' Contract Impairment clauses, that's nobody's business but mine and that craftsman. Yet the state comes down on him like a Monty Pythonesque 16 Tons if he doesn't have its permission to do the job I hire him to do.
Also, by the states treating small contractors like big contractors serves only to drive them out of business. And since the "compliance officers" and their bosses tend to be hired from union (who tend to be the big) contractors, that's a hidden agenda. How exactly does this serve the greater good?
What about this violation of the fundamental law to chill my choice of the craftsman I wish to hire?