Ernest Markey, a countertop fabricator in central Florida, drew the attention of national media as an embodiment of the downsized U.S. lifestyle. Markey relocated, moved to a smaller home, and cut back on the cars he owns. Unfortunately, Markey’s reset was driven by the very housing market he serves.
Previously Markey operated Stone Giant, with locations in Massachusetts and Florida, employing 60 and installing countertops in 15 kitchens each day. Now he runs Winter Park Granite, producing stone countertops for two kitchens a day, working with cabinetry firms, construction contractors and homeowners.
The marketplace can be a tough taskmaster or reward us kindly. We can see it’s powerful influence in the cabinetry firm closures, but in successes, too. In the same week Ribeau Custom Cabinets hit the auction block in Germantown, WI, we reported two other custom woodshops — Hulley Woodworking in Kenmore, NY, and Adam Gwin Fine Furniture in Natchez, MS — moved to larger quarters.
And while A.J. Pietsch, a fine millwork firm in Milwaukee is closing up, that story has a happy turn to it: The company was acquired by commercial retail woodworking firm TJ Hale in Menominee Falls, WI, where the plants will consolidated.
A Lost Generation
Homeowners are suffering from a sense of “lost wealth,” say economists, as home equity has declined or disappeared. While interest rates are falling, reducing payments for those with adjustable rate mortgages, the sense of loss is great among the nation’s 85 million owner-occupied homes (that’s 65.1 percent of the 131.7 million U.S. housing units).
The perception that homes can’t be trusted to appreciate, and homeowners’ sense of reduced wealth, dampens the enthusiasm for consumer spending. Market anomalies appear: Despite 15 million vacant homes, analysts say there is also a shortage of desirable housings — over 3 million homes for sale.
The shortage of housing, usually a positive indicator for new construction, results from a slowdown in bank foreclosures that generate low priced housing. And from as many as one million homes being held off the market as sellers wait for prices to rise.
Apartments Are Homes, Too
But there are bright spots in housing. Nationwide housing starts rose 15 percent in September, on track to reach 658,000 units. The gain shows a sharp increase on the multifamily side, as consumers move to rentals.
Cabinet manufacturer Fortune Brands showed it’s faith in the housing market, taking public a $3.2 billion home cabinet, door, window and security business. Ultimately, the 15 million vacant homes will prove to be an asset that someone will figure out how to leverage. Once a market for these homes is established, they will likely generate a healthy business in remodeling, or in some cases, demolition. Either way the demand and supply will achieve parity, and we’ll get back on track.
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