Snohomish County businesses that sell roofing, flooring, windows, lighting and other building materials are riding the wave of a nationwide housing boom, with sales escalating as high demand continues.
With mortgage rates dropping to a national average of about 5.2 percent, houses are being built at a rate about 1.8 percent higher than last year, the U.S. Department of Commerce said last month.
The increase is good news for Bill Weaver, president of Canyon Creek Cabinet Co. in Monroe.
“Business is booming,” said Weaver. “We’re probably up 17 percent over last year.”
Canyon Creek conducts most of its business in the Pacific Northwest, but it sells cabinets as far away as the East Coast. Competition on a national and local scale hasn’t been much of an obstacle these days, Weaver said.
“All the competition is swamped,” he said. “I don’t think competitors are worried about competition. They’re worried about getting their work done.”
Despite fear that a surge of homebuyers will precede a bursting of the so-called housing bubble, the immediate future looks bright for local building material companies.
A total of 1,572 building permits were issued in Snohomish County during the first quarter of the year, an increase of almost 21 percent over last year’s numbers, according to a report released by the Washington Center for Real Estate Research at Washington State University.
Some of the most notable growth in the county happened in Monroe, where last year’s totals for approved residential building permits have already been exceeded. Seventy single-family home permits were issued from January through May of this year, and the city’s permit coordinator, Kim Shaw, estimated that about 20 more have been issued since then. Last year a total of 74 single-family home permits were issued.
“I think things will stay strong,” said Weaver, the cabinet maker. “Whether or not they will continue at this pace, I can’t say. But I don’t think we’ll see a bubble burst.”
Pat O’Day isn’t losing any sleep over bursting bubbles either. The owner of O’Day Glass and Window in Everett said his sales have increased about 25 percent since the housing market started picking up.
“We’ve been doing pretty good this year,” he said. “More houses mean there are more windows sold. There’s a lot of competition out there, but when there is more demand, there’s a lot less.”
But a large portion of O’Day’s contract work comes from the commercial sector, and he said he isn’t worried about a possible slump in the housing market.
Everett had issued 85 permits for single-family residences at the end of May, putting the city on track to issue 44 more permits than last year’s total of 160.
But the sale of new homes is just one factor leading to increased spending at local building material businesses. Home resales in the first quarter of 2005 were up 13 percent over last year for Snohomish County, according to the report released by Washington State University.
Everett-based flooring store End of the Roll is reaping the benefits of home resales. The store, which conducts about 80 percent of its business with individual homeowners, has seen a 20-percent increase in business this year, owner Terri Missler estimated.
“A lot of people are repairing their homes to sell because the market is so good,” she said.
With business booming, Missler plans to open another store near Bellingham in the next couple of years.
In the first quarter of this year, Snohomish County building material and supply companies have grossed about $100 million in taxable retail sales, according to preliminary figures released by the state Department of Revenue. The same quarter last year saw returns of about $89 million, almost 14 percent less.
But the housing market can’t maintain this pace forever, said Northwest economist Bill Conerly. The Oregon-based consultant said that as a whole, Washington’s housing market is at its peak and “holding at a heavy pace.”
Because increased construction in the Northwest has been the product of low interest rates instead of a legitimate demand for housing, he said a slump is inevitable.
“I think we have been building more housing than we need,” he said. “We have this big shift from rental housing to owner-occupied housing. We have built a lot of new housing units, and it’s not like we have a huge demand for housing of any kind.”
The result will be higher vacancy rates for apartments and rental housing, he said.
The timing of a fluctuation is hard to predict, but Conerly said housing sales nationwide will most likely start to drop later this year.