Small builders feel the squeeze of changing market, uncertain times

Jamie Wayland, president of the local O'Jennings Home Builders, says the building boom in Greene is over: the big builders that moved into the area when it hit are moving on, and small builders are left out in the cold.
Wayland says some of his fellow local builders are filing for bankruptcy.
But others, including Wayland and Wendell Gibson of Gibson Homes, are advocating change and asking for help from local leaders.
Wayland's company specializes in new custom home construction, additions, remodeling and complete home restorations.
Gibson owns two houses in the Greencroft planned unit development fronting the Four Seasons age-restricted subdivision on Route 33 East in Ruckersville. Currently, any home built in Greencroft must contain at least 2,600 square feet, and Gibson would like to see that changed.
Wayland explains: When land and home prices started escalating in the middle of 2002, "it seemed as if everyone became a builder … anyone who had cash or credit lines started building houses and listing them for sale" and big, national companies started moving in. But eventually, the market was glutted, and then, the bottom fell out of the industry.
Both of Gibson's Greencroft houses, he says, "have been sitting for two years." One is rented. The other did carry an asking price of $539,000, "but is now being offered for sale at $475,000. If I sell it at that price, I probably won't make any money."
Gibson wants to keep building, but he wants to build houses that he thinks will sell - smaller homes with smaller asking prices.
Those homes, Gibson explains, will require smaller mortgages -- a plus now that lenders are tightening requirements and not just anybody can get a mortgage.
Until about a year ago, says Jackie Hensley, banking center manager at the Bank of America in Stanardsville, as long as the applicant had a good credit rating, his or her income was not verified, and a mortgage could be granted with no money down.
But now, says Hensley, incomes are verified, and down payments are required.
Last month Gibson appeared before the county's planning commission to request permission to build homes at Greencroft that are a minimum of 1,800 square feet, rather than the current 2,600 square foot minimum.
With Chairman Davis Lamb absent, the commissioners tied with a 2-2 vote, so the issue will go without their nod before the Board of Supervisors January 13.
Gibson will tell supervisors, as he told commissioners, that new mortgage standards are making it harder for people to buy large homes, and that reducing the minimum size requirement will allow builders to deliver product in the $300,000-$350,000 price range.
"Based on today's mortgage requirements, a working couple making $75,000 a year would qualify for these homes," says Gibson. What's more, "a home with a smaller footprint is more energy-efficient, so the people who buy them can afford to live in them."
University of Virginia Professor of Economics Edgar O. Olsen says builders know their markets.
"(They have) strong financial incentives to be well informed," says Olsen. "The current economic situation will induce some homeowners to become renters and occupy housing that is more modest in size and quality. It will also induce newly formed households who become homeowners to choose more modest units."
Wayland believes that though things will never be the same, they will get better.
"We can only hope that we learn from the mistakes that were made," Wayland says. "Growth in our county is not a bad thing. We may need to take a better look at how and at what pace we want our county to grow."
As for the market for that growth: Olsen provides insight.
He predicts a period of adjustment that will occur over the next few years, and a longer trend already at work.
"The retirement of the baby boom generation is upon us," Olsen says. "Over the next 20 years, I would expect a strong increase in the demand for smaller units of high quality resulting from their retirement."
In the meantime, says Jay Willer, executive vice-president of Blue Ridge Home Builders Association, "good quality builders are looking for customers. There's a stronger market, presumably, for first time homeowners and current homeowners who are looking to remodel or upgrade. Some of those jobs are attractive to small builders."