Providers of Niche Services Face Their Own Struggles in Market Slump
By Dan Morse
Washington Post Staff Writer
Sunday, February 24, 2008
As it soared, the region's housing market lifted the fortunes not just of home builders and real estate agents but also of those in less-obvious niches: termite inspectors, land surveyors and septic tank repairmen among them. Life was good for Terry Croson, who as a title abstractor scours courthouses for detailed land records that are needed to close a sale.
But Croson, who is single and raising her 6-year-old nephew, now finds herself living paycheck to paycheck, struggling to hold onto her home in Charles County. She said she made $30,000 abstracting last year, down from $47,000 in 2005.
"I've never seen it this bad," said Croson, 47, who has been in the business for 30 years.
The downturn in the housing market is rippling broadly across the region. Homeowners have suffered, but so have countless others who once served an economic engine running at full tilt.
"We're talking about hundreds of thousands of employees," said Anirban Basu, chief executive of Sage Policy Group, a prominent economic research company. "There's tremendous pain and uncertainty out there," he said, estimating that at least 10 percent of the region's economic activity is linked to residential real estate.
Arlington County plumber Johnny Lange said his business is down 20 to 25 percent because of sluggish home sales. Houses with septic tanks are often hooked into sewer lines as part of a sale, a job that can command $6,500 to $20,000, he said.
Radon Control Professionals Inc., a Reston firm, had 12 jobs in a recent week, compared with 30 in the same period last year, said James Humphryes, vice president. Humphryes said he might not be able to go much longer without laying off some of his small, specialized staff of five.
In Fairfax County, Mark Carlson, president of MBH Settlement Group, said his firm has shed 100 workers, mostly through layoffs, and is down to 100 employees in its 24 locations in Northern Virginia and Maryland. "You can't save the rest of them unless you do that," he said.
Sheryl Martin, owner of Quail Creek Baskets, has also taken a hit. Agents who once paid as much as $200 for gift baskets for clients are buying fewer, she said.
Compared with January of last year, housing sales were down 47 percent last month in Northern Virginia, 41 percent in Maryland and 38 percent in the District, according to Realtor groups.
Richard Clinch, a researcher at the University of Baltimore, said that from 2001 to 2005, as much as half of the job growth in metropolitan Washington was linked to the soaring real estate market. Many of those workers are "hidden" in jobs not widely thought of as linked to home sales, he said. The chain of workers involved in real estate deals has grown over the years, largely because of the money at stake.
Croson's job -- searching the land records as a subcontractor for Marlborough Abstract Inc., based in Prince George's County -- is an essential link. The firm generally works on behalf of settlement companies, determining whether properties are saddled with tax liens, estate issues, civil disputes or other problems.
Croson's job is at once mundane and complex, its title derived from a term -- abstracting -- that only those in the business know. To "abstract" land records is to summarize their key points.
In 2000, Croson bought a $155,000 home in a wooded enclave 30 miles southeast of the District. As interest rates fell, and the value of the house rose, she refinanced twice, exchanging some of the equity for cash.
She spent $4,000 fixing the backyard pool. She took her nephew, Toby, of whom she has legal custody, on week-long trips to the beach. She dropped $250 for his fourth birthday party, which featured a private reptile exhibitor regaling Toby and his friends with a small crocodile and an 18-foot boa constrictor.
By 2005, Croson had found other ways to cash in on the boom, and she was working on the side as a real estate agent. She said she made about $13,000 in commissions, bringing her total income that year to $60,000.
The next year, Croson and fellow abstractors took note of how quickly activity slowed. Some started losing their jobs. Croson held on, but she began to work fewer hours, and her work as a real estate agent dried up.
No more dinners for Toby at Chuck E. Cheese's. She dropped her health insurance and her life insurance. She recently spent $400 after a heater in her home broke and another $100 at Wal-Mart for a vacuum cleaner after her old one broke, draining her savings to near zero.
At home, Croson finds herself deflecting questions from Toby about their reduced spending. A new video game at Target? "You just had Christmas, for goodness sake," she told him.
Croson said that if she can't refinance to reduce her monthly mortgage payments, she will have to sell her house. Doing so might mean pulling Toby out of a prized public school, away from his friends, and would go against her overarching priority: making Toby feel secure.
Not everyone is hurting. The Real Estate Disposition Corp. is scheduled to arrive at the Walter E. Washington Convention Center next month for the first of four days of area auctions of more than 575 foreclosed homes in the District, Maryland and Virginia.
"Somebody's got to be able to sell something somewhere, and right now that's us," said Michael Schack, a senior vice president of the California-based company.
His firm expects to hire Washington area residents to run open houses before auction. The company will rent space at the convention center, and about 40 employees will stay in area hotels.
Also prospering in the downturn, said Basu, the economist, are bankruptcy lawyers and foreclosure specialists.
But clearly, he said, the market is a net loser for workers whose livelihoods are linked to residential real estate.
On a recent day, outside a land records room in a courthouse in Calvert County, Croson exchanged pleasantries with Kathy Smith, head clerk of the Circuit Court. Smith said she was trying to hire a new clerk.
"Do you know something we don't know?" Croson joked. "Is 2009 going to be a good year?"
Not exactly. "I have one foreclosure clerk," Smith said, "and she's bombarded."
Smith's statistics tell the story of Croson's workload. In 2007, the Calvert courthouse took in 33 percent fewer land record filings than in 2005.
Inside the records room, Croson ran into two friends and longtime competitors, Marie Kelley and Beverley Hewitt. Both work fewer hours than they once did, and they also have limited their spending.
Only four abstractors were in the records room, compared with the dozen or so who she said might have been there several years ago. In larger counties such as Prince George's, Croson said, she sees 15 to 20 abstractors, and two years ago she would have seen 30 to 40.
When business was good, Croson might have had enough work to spend an entire day on multiple jobs in a single courthouse. But on another recent day, as she took what was available, Croson worked a $50 job in Prince George's and another in Anne Arundel County. She spent $20 on gasoline, $5 for parking and $35 on day care, leaving her with $40 for the day.
That kind of income, she worries, won't impress refinance lenders, particularly because lending standards are more strict than they once were.
"It's a double whammy for anyone who's in the business," she said. "It's your problem, and everyone else's problem becomes your problem."
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