 "Photo: Jordy Wagoner/The Daily Texan")
New contracts for residential and commercial construction are not immune to the economic downturn as they have dropped 21 percent in Austin and Round Rock since last September, according to a recent industry report and several industry members.
The report from McGraw-Hill Construction said the total value of those contracts fell from $398 million to $313.5 million.
The value of contracts for residential properties has dropped 20 percent on average, while commercial property values are down 23 percent.
This statistic is tied to Austin’s economy, which reflects that of the nation and world, said Harry Savio, the executive vice president of the Home Builders Association of Greater Austin.
“As the economy has suffered, it’s only natural that that’s going to have some impact on Austin,” Savio said. “Job creation rates have declined.”
Construction of new homes is directly tied to the job creation rate, Savio said.
“If people have a job, they want a house,” he said.
Austin’s residential market has begun to show improvement since March of last year, Savio said.
Austin’s Neighborhood Housing and Community Development office, which provides funding to residential and nonresidential development projects, has just as many funding requests as ever, said Planner Principal Rebecca Giello.
“We have fewer resources than applications,” Giello said.
New construction start-ups are down, as is funding for completion of construction projects, which puts contractors out of jobs, said Juan Oyervides, the executive director of the U.S. Hispanic Contractors Association de Austin.
“We can’t make people follow through with these projects,” Oyervides said.
Contractors are powerless in facing a lack of job availability, he said.
“It’s difficult to combat it, because we don’t have direct involvement with the project owners and investors,” he said.
“Those decisions are made outside of our sphere.”
Austin contractors are holding on to jobs still available through a bond passed in 2006 that provided funding for general construction projects throughout the city, Oyervides said.
“We are one-third of the way through the bond program,” he said. “There’s still a good amount of jobs available through the city.”
Permit requests for construction are up 14 percent from last year, said Lynne Lightsey, a spokeswoman for the Watershed Protection and Development Review Department.
The department does not differentiate between large-scale renovations and smaller projects, said Wendy Morgan, another spokeswoman for the department.
“Permits can vary drastically — anywhere from hot water heaters to an addition [to a home],” Morgan said.
The Home Builders Association is looking to the federal government to increase the number of construction contracts, Savio said.
The government provides an incentive to people buying a home — new or old — for the first time in three years through the American Recovery and Reinvestment Act of 2009. New homeowners can receive a tax credit of up to $8,000 worth 10 percent of the home’s purchasing price.
The act has helped to restore the housing market after “the bottom fell out” in October 2008, Savio said. That tax credit program will end Nov. 30, he said.
If the tax credit is extended, Savio said he expects the number of contracts to be restored in the next calendar year.
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