With business way down, local home builders trying to hold on

May 31, 2011 12:00 am • Last Updated: May 31, 2011 4:13 am

By By LEE HOWARD Day Staff Writer

With home-construction permits statewide hitting an eight-year low in April, local builders say they are scrambling for work as never before.

"You just have to change with the times and do something a little bit different," said Chad Whitcomb, president of the Builders Association of Eastern Connecticut.

Whitcomb, who as president of Greensulators now spends more time doing energy-conservation work than building, said people are much more leery about making a commitment to a major project than they were a few years ago. And when they do express serious interest in proceeding, he said, many are looking for a bargain.

"But our costs haven't come down," Whitcomb said. "The only thing we can do is cut our profits. There's a misnomer that you can get a house for half off."

Southeastern Connecticut still has small pockets of construction activity such as at Groton Long Point, builders say, but demand for new homes likely won't pick up until the overall housing market - and consumer confidence in particular - begins to improve.

"As long as we're down, the economy's not going to come back," said Renee Main, executive officer of the local builders association.

It would help, too, if banks would begin loosening their financing requirements, said John Bolduc, chief executive of the Eastern Connecticut Association of Realtors.

The problem, say builders, is that people looking to build a new home or make major renovations often can't get their properties to appraise at a high enough price to get the mortgage financing they need. Some builders, they say, have had to reduce the prices of the homes below the cost of construction to get them to sell.

The difficulties are showing up in the numbers of home-building permits approved in Connecticut, which so far this year are less than half what they had been in 2010. In April, permit approvals were a third of what they had been the previous year and a quarter of the number seen at the height of the state building boom in 2004-2005.

No local municipality reported building approvals in the double digits last month. East Lyme, with 12, and Old Saybrook, with 20, are the only local towns with permits in the double digits so far this year.

Statewide, only 658 housing permits had been approved through April. That's the lowest number for the first four months of the year since records were kept starting in 2004.

Construction employment also is down locally, with April's numbers showing building-related jobs in the Norwich-New London area down 400 from last year. The 11 percent decline was the largest in the state last month.

"It could potentially get worse before it gets better," said Whitcomb.

But builders say a recent uptick in rental rates could presage an eventual housing rebound, though perhaps not for another few years. Other prognosticators, notably investment house J.P. Morgan, say the comeback could start sooner and reach a robust 20 percent increase in sales during the last quarter of the year.

Meanwhile, longtime building professionals such as Nort Wheeler, owner of Mystic River Building Co., are hunkering down and trying to reinvent themselves.

Wheeler, whose business volume in 2010 was half what it had been the previous year, said he is in the middle of retooling his business model, betting that the future is going to revolve around smaller, more affordable homes for first-time buyers and those who want to downsize. Wheeler said he currently is considering building his first home on speculation since 2005.

"We think there's a big market for all the people who bought $500,000 colonials a few years ago," Wheeler said.

Wheeler said he's currently looking for properties that could be purchased at a reasonable price - no easy feat, he said, when many people are still holding out for the high values of five years ago.

The builders association just broke ground on what could be a prototype home in Griswold, a super energy efficient House of the Year that will sell in the $200,000 to $225,000 range.

"Anything being built today, customers are demanding a value," Wheeler said.

And building homes that can save on energy costs is one way to add value, builders said. Construction professionals such as Erik Kudlis of Erik's Design Build Associates have made so-called "green building" a staple of their business.

"We're weathering the storm and doing quite well," said Kudlis, who currently has five projects under way.

Another builder, who concentrates on major renovations, said she signed contracts for two jobs just last week.

"I opened in 2008, and every year has gotten better," said Denise Nott, owner of Nutmeg Building & Remodeling. "I've got four guys, all working full time."

Nott said the key to her business has been using a soft sell and staying in touch.

"I spend a lot of time listening to my clients. I return phone calls. I don't leave them hanging," she said. "Believe it or not, in this economy people still aren't calling back. Are they nuts? That's the easy part."

Building association president Whitcomb said the industry as a whole may suffer, but individual companies like Greensulators - which doubled its business last year - can still find a niche and prosper.

Still, custom home builders who rode the highs of the real estate market a few years ago are itching to get back to what they do best. Many have been forced to take virtually any kind of work - painting, roofing, siding, gutters, maintenance - just to stay in business.

"Just about every builder in the area is ready to go when things get better," Wheeler said. "In the meantime, it's survival of the fittest."

l.howard@theday.com