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The Honolulu Advertiser

Posted on: Sunday, March 13, 2005

Home sweet ... wait

By Mike Leidemann
Advertiser Staff Writer

The state's vigorous economy is causing rising prices and some delays for those who want to build homes or renovate their existing ones, especially on the Neighbor Islands, according to industry officials.

The good news for the owners of this Manoa home is that they've found the right contractor to start the renovation work. Bad news is that costs increased while they waited for the contractor to become available — and projects take longer to complete these days.

Gregory Yamamoto • The Honolulu Advertiser

With more work than workers available, building costs have jumped as much as 20 percent in the past year — and that's if you can find somebody willing to take on a new project.

"You want to get started on a project right away? Good luck," says Honolulu builder Bob Armstrong. "If you can wait six or nine months, though, you've got a better chance."

On the Neighbor Islands, where there are smaller skilled workforces, the problems are even more acute. A new home in Kona or on Maui, once started, can take up to two years to complete, architects and contractors said.

"The robust economy has caused every sector of the construction and design service industry to be active and busy. Consequently you sometimes have to wait even longer to get something done. And that ends up costing money," said Patrick Onishi, president of the Honolulu chapter of the American Institute of Architects.

The booming economy has been good news for professional and trade workers, who are finding more work at better wages than anytime in the past decade.

Beat the backlog

Plan ahead. Use extra time before work starts to make detailed plans, assemble materials and receive your permits so project goes smoothly once it begins.

Work with a professional. Architects, designers and general contractors often have long-term relations with subcontractors that can ensure work gets done faster.

Check out your contractor. Ask about licenses, insurance and bonding before signing any contract. Ask for and investigate references from a contractor.

With an unemployment rate at 3 percent, the lowest in the nation, and more than 14,000 jobs created in the state last year, real personal income rose 2.7 percent and is expected to grow by a similar amount this year, according to the state Department of Business, Economic Development and Tourism.

That has contributed to a boom across all sectors of the economy that generated more than $1.4 billion in construction permits approved in Honolulu last year, with almost $1 billion going toward new and renovated homes, according to the city Department of Planning and Permitting. Another $100 million in projects are stuck in the permit pipeline, officials say.

The downside is that many homeowners have had to pay more and wait longer to get the work done, especially if they're looking for top quality work.

"One estimate went up $700 between the time they first contacted us and came back to do the work," said Manoa homeowner Jocelyn Kaneshiro, who along with her husband, Gary, has been gradually renovating the family home.

"And if you're in a real rush, you'll end up paying even more."

That's a sentiment echoed by many contractors, who have to pay extra to get quality work done.

"There are still a lot of people to do the work, but the best-quality guys are asking for higher wages and they're getting them, as much as 20 percent more," Armstrong said. "They know how hot the economy is and they can pick the jobs they want to do."

That's reflected in both a slowdown in the number of homes built last year and an increase in their prices.

Construction of homes declined 6.6 percent in 2003, while prices rose 21 percent to an average of more than $502,500, according to data released last week by market researcher Ricky Cassiday of Hawaii HomeLoans.

The problem is exacerbated by similarly strong economies on the Mainland and around the world, which means much-needed building materials are diverted away from the Islands, builders said.

"There's so much steel and plywood headed to China right now, that you can't even get all you need," he said. "The prices of steel, in particular, have gone through the roof. We've been training contractors for the last 10 years to build with steel and now they're having to switch back to wood."

Another problem is a backlog of work at county permit offices. In Honolulu, the Department of Planning and Permitting is often swamped with building permit applications that can string out the start of the project for weeks or months, builders said.

"What used to take two or three days, now takes two or three weeks," said Honolulu builder Danny Graham.

In his State of the City address earlier this year, Mayor Mufi Hannemann promised to alleviate the backlog with more hires and technological innovations, include an online, pre-application permitting process and a method to allow some advance payments of permit fees.

"I can't tell you how many times people have complained to me about the ordeal of seeking plan and permit approvals," Hannemann said in the speech.

The construction delays are probably most critical on the Big Island, where dozens of luxury homes under construction in West Hawai'i are drawing most of the skilled workers from around the island.

The number of Hawai'i County permits has jumped from an average of about 130 per month over much of the past decade to 400 issued in February, according to county records.

"It's a lot harder to find qualified workers these days and to get them to show up when you need them," said Paul Bailey, a builder in the Puna area. "People are overcommitting and I end up waiting for over a month to get a subcontractor that I need tomorrow. The result is that what used to be a four-month job now takes six months."

It's the subcontractors — plumbers, electricians, painters, roofers — who can pick and choose what work they want right now, Graham said.

"And they can dictate, within reason, how much they're going to charge. That can put a crimp in the plans of somebody who is trying to keep costs down."

Sometimes the problems get even bigger.

"There are some guys out there trying to take on 25 projects at once. Then they can't deliver and they end up with a lot of angry customers," he said.

Bailey, Armstrong and others say the best solution is to work with licensed professionals who often have long-standing relationships that allow them to more quickly bring carpenters, plumbers and other skilled workers onto a project.

"I just got a project in Kona finished in three weeks because I was working with people who have known and worked with me for a long time," said interior designer Elise Yates. "Those are people who you know you can rely on."

On the other hand, those who try to go it alone can run into trouble, she said.

"Even if you find someone, you've got to be concerned. Sometimes, the ones still available are not that good," she said.

Derek Mar, who owns Derek Arthur's Painting Co. and was working on a Manoa Valley home last week, recommended that homeowners insist on using licensed contractors and get references from previous homeowners.

"Make sure they're licensed, insured and bonded," he said. "Otherwise, there are a lot of guys out there ripping people off."

Honolulu builder Danny Graham said that sometimes the slowdown can have a serendipitous side.

"With a longer period to plan, you can plan better. The homeowner gains and the project runs more smoothly," said Graham, who for 10 years has been running seminars in which people interested in building or renovating a home can get help on how to work through the process.

Reach Mike Leidemann at 525-5460 or mleidemann@honoluluadvertiser.com.