Housing market remains 'disaster' in Westmoreland County

Joe Napsha
| Monday, Sept. 1, 2014, 11:00 p.m.

Veteran housing contractor Greg Kinzler of Washington Township knows all too well the lingering effects the nation's 2008 recession has had on the region's homebuilding market.

“It's still a disaster, what's going on. How do you expect the housing market to be booming? There are numerous factors causing the housing market to drop,” said Kinzler, president of Sparkle Construction – SPP Inc.

Activity in Westmoreland's residential construction market has fallen so sharply that only 430 building permits were issued in 2013 for new single-family and multi-unit residences, less than half the 1,028 building permits issued 10 years earlier, according to U.S. Census Bureau statistics.

Prospective homebuyers are having a difficult time meeting banks' credit requirements, Kinzler said.

Real estate taxes are increasing, but property appraisals are not, and updated building codes are adding $7,500 to $15,000 to the cost of construction, said Kinzler, former president of the Builders Association of Metropolitan Pittsburgh, who has constructed more than 260 homes since 1989.

“A lot of the contractors are feeling the pressure, and some had to close their doors,” said Fred Williams, president of the Westmoreland Professional Builders Association, a 130-member trade group based in Hempfield.

And those that have survived are feeling the pinch, Kinzler said.

Even when they do build a few homes a year, the profit margin is about half of the pre-recession level, Williams said.

The homebuilding industry in the region also has been hurt by homeowners selling their existing homes, said Williams, operations manager for KLA Construction in Unity.

“It seems like the market is flooded with good deals on existing homes,” Williams said.

Westmoreland County's decline in building permits for new residential construction is mirrored by the more than 50 percent drop in permits at the state level in the past decade – from 47,356 in 2003 to 21,650 in 2013.

Because of the recession, statewide permits for new residential housing plunged to 14,967 in 2011.

“The building permits are trending with the economic downturn,” said Melanie Wise, spokeswoman for the Pennsylvania Builders Association. The housing industry has been hurt by the tight money market, where it is hard for homebuilders as well as prospective homebuyers, to get credit, Wise said.

But there are signs of improvement.

The number of building permits issued in Westmoreland for new single-family and multi-unit residential construction has risen in each of the past three years, giving homebuilders hope for the future.

“We have noticed a gradual increase in the area,” Williams said.

“The market is coming back at a good pace,” said Roger Glunt, president of Glunt Development of Churchill, builder of high-end homes.

Glunt, like other surviving builders, had found ways to adapt to the changing market. He used to build 25 to 30 smaller homes but now builds 4 to 5 upscale homes that are in the $700,000-to-$900,000 range.

The market has left some homebuilders with few options when housing starts are scarce.

“When we're not building houses, we're into remodeling,” Williams said.

“We're very, very busy as remodelers,” Kinzler said.

Joe Napsha is a staff writer for Trib Total Media. He can be reached at 724-836-5252 or jnapsha@tribweb.com.

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