Northern Nevada home builders are cutting jobs and inventory to survive the coming year and slumping house market.
Perry DiLoreto, a Damonte Ranch developer in south Reno, said he is not building a single house and is waiting until buyers are more confident about their jobs and housing prices and are ready to buy.
"The best thing for builders is to stop the supply," he said. "That's what we're doing. We're not putting up a single family home. Why would you want to do that if you are not making any money?"
In Washoe County, residential buildling permits dropped 67 percent since peaking at 6,404 permits in 2005. The 2,089 permits for 2007 are 39 percent lower than the previous year and the lowest number of new home permits in 15 years.
The number of construction jobs in the Reno-Sparks metropolitan area has declined as well; the building trades employed 20,900 in November, down by 2,600 from a year earlier, according to state statistics.
Nationwide, home construction starts in 2007 dropped 24.8 percent, the largest decline in 27 years.
"The best thing, in the short term, is building permits fall even more," DiLoreto said. "As they fall, supply will have a chance to match itself with demand. But I don't think it's going to turn around soon. We have some problems to sort through."
Paul Curtis, chief executive officer for the Kiley Ranch development in Sparks, said his company has taken a similar tack.
"We basically pulled all residential land for sale off the market," he said. "Why chase the market down?"
Don Jeppson, a Washoe County building official who oversees building outside the cities, said the drop in building permits has bottomed out or stabilized.
"The next few months will confirm or deny that. But I don't get the sense that we are free-falling like we were at the end of last summer," he said.
DiLoreto said some builders are offering a few homes for sale at huge discounts to find out what buyers are willing to pay.
"Part of the problem is the false economy we were operating on," he said. "There were a lot more buyers in the market than there should have been, both speculators and those who shouldn't have been in conventional (lending) terms. That created a lot more demand. Builders raised their prices and rushed to supply more product. But a lot of them weren't buying homes to live in and they weren't qualified buyers.
"We need to get back to the basics," DiLoreto said. "People with good credit, a job and a down payment can get a terrific loan these days."