Ismael Alonzo, a solar installer for AltSys Solar, Inc., fastens new solar panels to the roof of a garage behind a southwest Fresno home in this 2017 file photo. By David Castellon

Heavy California rains during the starting months of 2023 delayed construction projects up and down the state, but the industry is still budding with activity.

Bad weather wasn’t the only thing holding up construction in California and across the nation, however.

The Federal Reserve recently increased the federal funds rate from nearly zero in March 2022 up to 5%.

Typically, to balance out increased costs, construction companies must modify their project pricing and budget their resources accordingly, which could also lead to firms taking on less work and instituting temporary or permanent layoffs.

Talk of “looming recession” also doesn’t spur confidence in developers to build commercial or residential projects — something we were reminded of in the 2007 housing market crisis.

Data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development show building permits for privately-owned housing reached 1,413,000 in March, 8.8% below February’s rate of 1,550,000.

That figure is 24.8 % below the March 2022 rate of 1,879,000 permits for privately-owned housing.

Locally, however, construction firms are staying busy with repair and improvement work for homes, HVAC systems, businesses and infrastructure like roads, sidewalks and ditches.

A 2022 study from Joint Center for Housing Studies of Harvard University reported that the home improvement industry grew by more than 3% in the two years prior.

 

Up on the roof

Salvador Cuevas, CEO and operations manager of Renova Home Improvements in Fresno, said the firm specializes in energy efficiency home improvements including air conditioning, windows and solar power systems.

Recently, Cuevas said there has been increased demand for roofing services, but there has been challenges for the company to respond.

Financing has been a major hurdle for homeowners trying to make roofing improvements to their home, especially after The Fed increased interest rates.

“It’s been quite a challenge for homeowners, and then that bank [Silicon Valley Bank] going out of business made it very difficult for homeowners to qualify for home improvement loans,” Cuevas said.

Many homes in the Central Valley are older, and built with poor materials, Cuevas said. High winds can break pieces of a home’s roof, leading to water leaks, which can then lead to mold and structural damage in the walls.

Homes with tarps on the roof to cover leaks is not an uncommon sight in the Central Valley, Cuevas said.

The firm has seen more demand this year to repair roof leaks than any other year, but Cuevas said they don’t have enough manpower to respond to everyone.

The combination of variables like the Covid-19 pandemic and inflation are making it more difficult for people to replace their roofs, Cuevas said.

Two years ago, materials for a roofing job cost about $70-$80 dollars per roofing square. Now it is about $120 dollars per square.

Cuevas believes now is the time for officials to create credits for low-income people to repair their roofs.

“Nobody wants a leaking roof,” Cuevas said.

Cuevas said a bigger challenge to families is replacing their swamp coolers with central air conditioning, as swam coolers just suck in the outside air without filtration.

Officials also need to make a credit for low-income families to replace swamp coolers, Cuevas said.

The solar power side of Renova Home Improvement has also seen increased demand for rooftop systems.

Cuevas said that in recent years, there have been dozens of solar companies — many from outside of the area — opening branches in the Central Valley.

There are different types of solar panels. Some are meant for colder areas and others for hotter areas. Many solar companies in the Central Valley sell panels that are meant for colder regions so that homeowners must replace them quicker, Cuevas said.

Solar companies do this for a quick profit because many of the companies won’t last, Cuevas added.

 

Roads to repair

Recent rains and subsequent floods also created a need to repair surface streets, highways, ditches, ag land and other vital infrastructure.

Seal Rite Paving & Grading in Fresno is a general engineering contractor whose services include dirt work, asphalt pavement, concrete pavement, blacktop work, gravel work, grading and more.

Savanah Hansen-Henderson, chief estimating officer at Seal Rite, said that the firm typically sees an increase in public works jobs at the beginning of the year, but starting the projects was delayed due to rain.

Though there hasn’t been a large uptick in requests for public road work, the company is busy with their private clients, whether it be repaving parking lots and moving dirt.

While the public work is also focused on pedestrian improvements like sidewalks, private clients are investing in their parking lots to be more Americans with Disabilities Act compliant, and driveways.

Hansen-Henderson said that the firm has been busy across the Central Valley to improve pedestrian access to different parts of cities.

Solar and electrical companies also contract Seal Rite for patch-back concrete and asphalt work when they install solar or electrical systems to businesses or homes, which is seeing a natural increase in demand.

She said that about a year ago the company was getting more inquiries from developers for grading residential projects, and from commercial developers inquiring about prices for revamping commercial projects.

After the recent tribulations of the housing market, such inquiries became less frequent, Hansen-Henderson said.

“Fortunately, during times that seem close to recession, the government tends to invest more with itself, and we will follow that avenue to get more public work projects as they take the opportunity to put more money into the community,” she said.

During times with a more robust economy, Hansen-Henderson said construction companies tend to get more private clients, as consumers tend to have more disposable income and want to make their properties look better and redo their roads.

Though the company tries to forecast material prices from suppliers and for their clients to keep costs down, sometimes costs for the project must go up along with material price increases.

The oil index does affect the asphalt material prices, Hansen-Henderson said.

The company did have a slow start this year due to rain, Hansen-Henderson said now that warmer weather is returning, there is a lot of work to be done.

“We will be comfortably busy,” she said.