Is LI in a construction slump?

BY ELLEN YAN | ellen.yan@newsday.com

6:04 PM EST, January 17, 2008

Construction started on 1.35 million houses and apartments nationwide last year, a drop of 25 percent from 2006, the Commerce Department reported Thursday. It's the biggest annual decline since 1980, when inflation led to layoffs across many sectors. Long Island saw a $525 million loss in housing construction in the first half of 2007 compared to the same period in 2006, according a report last year from the Long Island Builders Institute. Newsday staff writer Ellen Yan talked to Michael Watt, who this month became LIBI's executive vice president.

Q: How does the Long Island housing market compare with what's going on nationally? A: We don't have too many, if any, people building on spec. Building on spec is when you build without a buyer in mind. A lot of guys nationally built homes, even divisions, on spec because everybody was flying high, and then all of a sudden they got stuck with a ton of product. For the most part, this (Long Island) industry is filled with a lot of veterans, and the veterans, having survived the down cycles, know that what you really want to stay clear of is building on spec.

Q: Will Long Island see the huge slump that the rest of the nation is experiencing? A: I don't think so. We're so limited in our housing supply. You can't overdevelop Long Island because there's not that much space left.

Q: At a time when they can't build, what are Long Island builders doing? How are they trying to hang in there? A: Some of the guys are cutting back on staff. The Long Island building community is very close knit and very experienced and very mature, and they've been through this before.

Q: Now that you've taken over the Long Island Builders Institute, what ideas and campaigns have been bubbling in your mind on how to improve the industry and survive the slump? A: One of the great ironies is there's no greater time to buy a house than right now. The mortgage rates are down. The builders are more competitive than ever. What we'll do as an association is work to make our marketing efforts . . . as efficient and effective as possible. We're going to be revamping our Web site and becoming a lot more prominent in the community, just to let people know that those who are looking to build a home or buy a home have choices, and we want them to make sure they choose a LIBI member.

Q: When do you expect the climate to start looking up for the Long Island building industry? A: If the local municipalities were more conducive to allowing the building industry to construct the amount of product that the region requires . . . if all of a sudden we were able to build apartment buildings and multiple family residential units in three or four key areas on Long Island, I think you would see such a stimulated economy locally that everything else would kind of fall in place. But you can't.

Q: Is there an upside to the down market? A: It makes people more open to change. That, combined with the growing number of people who are losing their children and their grandchildren off Island, becomes enough of an impetus to say, "You know what? Maybe the world will keep spinning if we put an apartment building next to a train station or if we allow multiple family residences in a certain area." Again, it has to make sense. The builders are not in the habit of building things that people don't want or that don't make sense.