It’s two weeks before Thanksgiving and the beginning of Hanukkah, and Maurice Tannenbaum figured he’d be booked solid through Christmas Eve. At one point during his 13-year tenure as the owner of the tony Gladwyne salon, OMG, clients waited up to eight weeks to score an appointment at $300 per cut (throw in a few hundred more for color). “It ain’t what it used to be,” says Tannenbaum. “Business these days is very sporadic and unpredictable.”
Recession, readjustment, economic shift—call it what you will. Tannenbaum has had no choice but to adjust, even if that means offering e-blast discounts and granting day-of appointments to fill his schedule. He can’t put his finger on exactly what’s going on at the moment, but he’s certain of one thing: “It’s very challenging to be a small business owner today.”
Granted, Gladwyne isn’t Las Vegas or Fort Myers, Fla. Like the rest of the Main Line and western suburbs, it wasn’t as hobbled by the sort of unprecedented foreclosures that hit Nevada, Florida and other volatile real estate markets—though home values did drop and sales slowed for a time. Around here, the repercussions were more subtle. But when things were good, boy, were they ever good.
That may explain why, five years later, it’s tough to convince Tannenbaum and other area business owners that we’re in a recovery—or that it will ever amount to a full-fledged rebound. “Main Liners are being more conservative with their money,” Tannenbaum says. “They’re thinking twice and asking themselves, ‘Do I really need this?’ They never did that before.”
Just across the street from OMG, Albert Breuers voices similar skepticism. “This recovery is not what people might call a recovery,” says the owner of the Old Guard House Inn. “Whatever it is, it’s very, very, very slow. People are afraid, and they’re holding on to their money.”
At this beloved special-occasion eatery, entrée prices start at $25, and the majority hover in the mid-$30 range. Seven years ago, locals treated it more like a neighborhood joint, having dinner there up to three times a week. Now, says Breuers, it’s more like once a week, and one drink instead of two or three.
“Prior to 2008, everyone was happy. Everyone made money, and everyone spent money,” says Breuers. “I absolutely have seen a change in my business. We work harder for the same thing—or a little less.”
None of this comes as a shock to certified financial planner Patti Brennan. After the fallout of 2008, many of her clients were “going through the financial equivalent of post-traumatic stress disorder.” Some, she says, lost up to 50 percent of their total wealth within a few months during that period.
“At the time, people were really uncomfortable because no one knew how much further down the market would go,” says Brennan, who’s president of Key Financial in West Chester. “There were a lot of conversations about us going through the next Depression.”
What Brennan does find surprising is how long it’s taken for the collective psyche to rebound. “The sense of fear was so raw that it’s taken some time for people to recover in terms of comfort level,” she says. “But we’re beginning to see it. A lot of people who were frozen in fear are beginning to thaw out a little.”
You don’t have to convince Linda Z. that there’s been a thaw. She’s seen it in the appreciating home prices. “We definitely had our bubble years, where prices kept rising,” says the agent with RE/MAX Executive Realty. “Now, we’re in a much healthier position, with long-term gains.”
In her more than 25 years on the Main Line, Z. had gotten used to seeing values steadily rise. “Then we had the horror of those few years,” she says. “Banks were giving loans to [the wrong] people.”
Robin Gordon agrees. “There’s a lot of people who bought in 2006/2007 who really overpaid, and I don’t think the market has caught up to those prices—it’s still down 25 percent or so,” says Gordon, who’s with Berkshire Hathaway HomeServices Fox & Roach Realtors.
So, while the demand for homes priced between $600,000 and $1.2 million has been strong, forcing some multiple-offer situations, the $2 million-and-up market is still trying to recover. And agents and buyers alike wish there were more homes for sale. “Inventory really has gone down tremendously, so there seems to be a lot more demand,” Z. says. “We definitely have the buyers; we just need something to sell them.”
Demand has increased thanks, in part, to younger buyers coming from Center City and more businesses relocating to the area. “People may seem hesitant to put their houses on the market because they may have seen their neighbors sell at inflated numbers,” says Z. “But now we’re back to normal numbers.”
The hesitation may also be attributed to something more simple: In general, people have become more conservative with spending. Most of Pete Hoover’s clients want to make sure they actually have the money saved before they even think about a purchase. Post-recession, it certainly appears that “keeping up with the Jones” has lost much of its appeal. “Fewer clients are borrowing money than in the past,” says the president of Hoover Financial Advisors in Malvern.
Preserving one’s assets—it’s a pervasive and familiar theme. “People today are way more interested in value for their dollar,” Hoover says. “They’ve become better shoppers, and they’ve become more price conscious. They’re worried about making sure they’re getting something for their money—way more than I remember in the past.”
So it’s no secret that our spending habits are a big reason why business owners are feeling the pinch. True, the recent retail-and-restaurant spike in Bryn Mawr is a pretty solid indication that more money is changing hands. It’s just a question of how much more and how often.
As president and CEO of the Main Line Chamber of Commerce, Bernie Dagenais has to be optimistic. “As confidence in the economy grows, many people are returning to their old spending habits,” he says.
Rest assured the stuff that mattered to consumers before the recession still matters today. “The quality of products or services, relationships. and how you do business are major factors in spending decisions,” says Dagenais. “Businesses that are well positioned—restaurants with good food, companies that continued to market themselves through the downturn, and businesses that offer something we need—are finding more customers.”
After surviving his worst year in three decades in 2010, Marty Cappelletti is glad to be on what seems to be the other side of the recession. “Before the adjustment in 2008 and the beginning of 2009, we were doing large, blown-out additions and some new homes,” says the owner of Martin J. Cappelletti Custom Builders in Paoli. “Then everything came to a stop. I was actually having the phone lines checked at my office to make sure they weren’t disconnected. That’s how quiet everything got.”
For Cappelletti, business started to slowly pick up at the end of 2010, when existing clients began calling him for smaller home-improvement projects.
“A lot of people who could spend money weren’t spending it because they didn’t want to appear above it all—above the fact that a lot of people were hurting at that time,” he says. “Some just thought, ‘Even though we think we’re fine, we’re not going to do anything big until we feel like this ship has righted itself.’”
But confidence appears to be back—at least in Cappelletti’s industry. Last year was his strongest since the downturn.
“Our prices points on renovations and additions are back in the $500,000-$2 million range. We didn’t those projects for two years,” he says. “We have jobs well into this year. Our vendors and subcontractors are reporting an upturn, too.”
And in these iffy economic times, you can’t ask for much more than that.
As president and executive director of Clarifi, a regional nonprofit financial-counseling service, Patty Hasson has seen a spike in Main Line clients, due mostly to the housing crisis. She offers some advice on how to get back on track if you’re struggling.
Make friends with your mortgage. Hasson works with many clients on loan modifications so they can stay in their homes. “People come in who are unemployed or underemployed—meaning their new job is not at the salary they were making,” says Hasson. “They’re overwhelmed with their mortgage payment and have to take a hard look at their budget and their priorities—but they are doing it.”
Suck it up. Ask for help. Many people wait too long, for fear of being stigmatized. “If they’d sought out assistance earlier, there may have been many more options available to them,” Hasson says. “Individuals with a higher income usually aren’t comfortable calling and asking for help. They think, ‘If I’m making six figures, I can’t possibly be in financial trouble.’ When multiple things hit at the same time, it can catch up with you.”
Reconsider those four years at NYU. Many of Hasson’s clients are looking longer and harder at the price of college. “We recently worked with a family whose child was accepted into a private university,” she says. “We figured that the child and her parents would’ve graduated with more than $80,000 in debt. “Parents need to think about the implications for both their future and their child’s future.”