Half full or half empty? Homebuilders mixed on outlook

REGION

The beginning of 2010 has brought a mixed bag of news to homebuilders trying to pull their industry out of the economic slump.

Sales of new homes remain lackluster nationally, but federal tax credits and other incentives are attracting the attention of potential buyers.

Across Pennsylvania and in the midstate, homebuilders' reactions to these trends are just as mixed. Some firms continue to struggle to earn enough revenue to stay afloat, while others see their fortunes rising in the second quarter.

"Some of our members are saying that it's their best year ever, while others are going out of business," said Scott Elliott, spokesman for the Lemoynebased Pennsylvania Builders Association.

Generally, PBA members in the western half of the state appear to be having more trouble emerging from the housing slump than their counterparts in the eastern half, Elliott said. And lower- and medium-priced homes tend to be selling better than luxury homes.

Many association members continue to turn to other lines of business to bring in muchneeded revenue, Elliott said. Some have turned to remodeling or light commercial construction work One unnamed contractor earned a mention in the March issue of the association's member magazine, Keystone Builder, for supplementing his income by providing DJ services at parties and other events.

Lisa Cooper turned to remodeling to help pay her firm's bills last year and thinks the same might be true for much of 2010.

"I'm looking for the light at the end of the tunnel, but I don't see it coming in the next quarter," said Cooper of Cooper Custom Homes in East Hempfield Township, Lancaster County. "The traffic at open houses is decent, but there's no urgency among buyers. That's the problem."

Perry L. Cisney is even less optimistic. Like Cooper, Cisney"s business, Perry L. Cisney Custom Contractor in Springettsbury Township, York County, has relied on remodelingworkas it waits for home sales to rebound. But that hasn't happened, and now demand for remodeling projects also is slowing, Cisney said.

"I don't expect any major change this year," he said. "I've been in the business for 38 years, and it's the worst I've seen. It's terrible."

But Cooper and Cisney don't necessarily reflect the experience of all homebuilders in Central Pennsylvania. Some of their counterparts said they have seen signs of recovery during the first three months of 2010.

Stephen Black of Stephen Black Builders Inc. in Elizabeth Township, Lancaster County, said he has noticed a shift among his firm's new contracts toward homebuilding and away from remodeling. And the new homes the firm is building are not scaled-down versions of the firm's traditional offerings, Black said.

The optimism is even more apparent at Triple Crown Corp. Inc. in Lower Paxton Township, Dauphin County. The company expects its sales of new homes to double over last year as a sense of normalcy slowly returns to the market and the upcoming expiration of federal tax credits forces potential homebuyers to purchase quickly, said Mark DiSanto, Triple Crown's CEO. Consumers trying to take advantage of the $8,000 firsttime homebuyer tax credit or the $6,500 repeat homebuyer tax credit must sign binding sales contracts by April 30.

Obviously, we have gone through a recessionary period, but we think we have hit the bottom of this recession," DiSanto said. "There still is a need for homes. People continue to get married, and people continue to have babies. And you can only live with mom and dad for so long."

The housing industry's struggles have even provided new business opportunities for some homebuilders. In the past year, Triple Crown has purchased and revived four partially finished residential communities on the West Shore. And Cooper has discovered that she likes the remodeling business, even though she wishes her company was doing more homebuilding.

"I like the interaction with the customers," Cooper said. "It's amazing how we can take a house that's worn and make it feel like it's a brand-new house."

[Sidebar]

-"I'm looking for the light at the end of the tunnel, but I don't see it coming in the next quarter."

Lisa Cooper, Cooper Custom Homes

[Sidebar]

Recipe for recovery

What will it take for 2010 to be the year when homebuilders' fortunes finally turn around for good? Depending on who you ask, the answer is either about practicality, politics or psychology.

Many members of the Lemoyne-based Pennsylvania Builders Association report that access to financing remains a significant challenge for consumers, said association spokesman Scott Elliott. Until they have access to the funds necessary to buy new homes, many potential buyers will not be able to move forward with purchases, he said.

Pennsylvania contractors also are contending with new building code mandates that the PBA estimates could add thousands of dollars to the cost of new homes.

Stephen L Edris said the recovery is tied to consumer attitudes. The generally conservative nature of the midstate is holding people back from buying new homes, even if they have enough money to afford the purchase, he said. It may take this region longer to fully bounce back than in other, more freespending markets, he said.

"(During) the boom we went through a free-for-all. People were rampant with money from their investments," said Edris of Stephen L Edris Custom Contractor in Rapho Township, Lancaster County. "But now people have to reel in and figure out what their next step is. People are only going to act if they absolutely need to or if they feel confident enough in their ability to afford a new home."

[Author Affiliation]

BY CHRISTINA REARDON

Contributing Writer