If you're wondering when things will turn around for the landscape industry, keep an eye on the homebuilding industry. That's a good bellweather for the landscape industry. When builders were building, buyers were buying, and homeowners were taking out home equity loans for improvements and landscapes, encouraged with rising home prices and low interest rates, times were good for landscape companies, especially firms offering installation and construction services. Companies that specialized in installations for builders benefited the most from the construction activity.

Things have changed, both for homebuilders and landscapers, and the news, especially as it relates to homebuilding activity, doesn't look so hot for 2009, either.

Charles Shinn, Jr., Ph.D., a respected consultant to the construction industry, doesn't see much change in the homebuilding market until late 2009. But he urged builders to stay positive and do whatever they can to survive and prepare for the market's return, because when it does, it will offer "once-in-a-lifetime opportunities."

Shinn, president of The Shinn Group, made his prediction based upon housing cycles he's experienced and studied during his 35-year career in the industry. He made his remarks and fielded questions from participants during a recent webinar sponsored by Builder Magazine and Builder Partnerships, a company in The Shinn Group

Typically, he says home building activity runs in 7-year cycles from peak to peak. This last one lasted 14 years (1991-2005) and was extended by artificially low interest rates. While economic conditions worsened in the spring of 2005, contractors missed the signals and kept building houses through June 2006 at 1.8 million starts annually. (The industry will likely record 450,000-500,000 single-family starts in 2008, more than a 70% decline from the 2006 peak.)

The building boom contributed to the excess inventory that was growing, fueled by people treating their houses like investments that would continue to appreciate

Shinn says down cycles (at least those since 1959) historically have lasted 21 months, the last one, prior the present one, extending from January 1986 to January 1991. But they've been getting longer. He feels the industry is one half to three quarters the way through the present down cycle.

He says the recovery will not be the classic “V” or “U”-shaped recovery. “We're going to hit bottom and stay there awhile,” he says. And that's bottoming out in both starts and prices. He says the market will have to use up its inventory of houses and return to pre-bubble (2002-2003) house prices before it can move ahead again.

“There is some pent up demand but there's uncertainty in the market right now,” he adds, and banks are struggling to raise capital. The problem right now is mortgage availability.

There are some glimmers of hope on the horizon, says Shinn. Sales of existing homes are starting to pick up, which usually signals more demand for new homes three to six months later.

Shinn's advice to homebuilders:

•    Stay close to your banking resources.

•    Price your houses to sell. Sell what you can, not what you want to sell.

•    Do what you can to make your services affordable.

•    Do a business plan and do weekly updates with your bank.

Some markets are already showing signs of recovery but the industry, as whole, probably won't see much improvement until late in 2009, he believes.

He says the industry has had “two years of tuck in your tail, keep your cash and reduce staff . . .but that will change.”

He says homebuilers will come out of the year “with different products, customers and customer demands.”