2014 shaping up to be good for builders

A house under construction in East Greenwich Township by Scott Rote of Haven Homes Builders L.L.C.
A house under construction in East Greenwich Township by Scott Rote of Haven Homes Builders L.L.C. (TOM GRALISH / Staff Photographer)
Posted: March 16, 2014

If you subtract January and February, 2014 promises to be a better year for the area's small builders - the ones who build a few spec and custom homes annually, often with one or two full-time employees and a handful of subcontractors.

Though they stand in line behind the big guys for building lots and financing, they make a go of things just the same.

"I just wish this winter had happened three years ago, when I was doing nothing," said Camden County builder Charles Kojeski, champing at an icy bit to finish five houses he has under construction.

Kojeski, recent past president of the Builders League of South Jersey, builds 30 houses, custom and spec, "in a good year," and one or two in a bad year - mostly in Camden County, but some in Burlington County and a couple toward the Shore post-Hurricane Sandy.

After a "spectacular 2005," he said, 2006 found him with unsold spec homes as sales stopped.

A builder for 40-plus years, Kojeski ended up "basically giving one house away for $75,000 less than it cost us to build," he said, and "we took a lot of $50,000 hits" as well to unload houses.

"I still have building lots from 2005 I paid too much for," he said, adding that remodeling and fire restorations helped him through the tougher years. Today, those lots are still valued "nowhere near what I paid for them," he said.

The economic climate continues to improve for small builders, however.

Scott Rote started Haven Homes Builders L.L.C. in Brigantine 10 years ago, after working two decades as a carpenter for others.

In 2013, Rote built eight spec, semi-custom, and custom homes, which "is about average for me [and] good compared with the last few years."

Right now, he has three houses going for other builders and two specs for himself, and is working on a 10-lot subdivision in Winslow Township, in southeastern Camden County.

"I did three houses there last year," Rote said, adding that it helps the bottom line to "mix things up" with custom and spec.

"I try to stick to new homes" even in tougher times, he said, although he does some large additions.

"The full-time remodelers usually can do things better than part-timers," Rote observed.

"I am going full time," he said, adding that the new-home market is even better at the Jersey Shore than inland.

Though "the big nationals [builders] have tract housing pretty much wrapped up, with spec housing, if you can build it, someone will buy it," he said, "both at the Shore and inland."

Land prices have come down from their highs, "although I don't expect them to come down any further," Rote said.

Despite growing competition for lots as pent-up demand reaches the bursting point, "there are still some foreclosures available, and prices have stabilized," he said.

The higher-end market, both custom and spec homes, has undergone a resurgence, said Chris McGinn, president of J.C. McGinn Construction in Lahaska, Bucks County, who has been building since 1978.

McGinn builds four custom houses annually, "nice" homes that can take up to a year, such as the 9,000-square-foot, $2.8 million place he's working on.

"These are not first-time buyers and don't need financing to build the houses that they want," McGinn said.

He does try to mix it up in the same way Rote and Kojeski do - in his case, a seven-lot subdivision, Core Creek Woods, in Lower Makefield Township, with prices ranging from $1.3 million to $2.7 million.

"There are seven houses on 30 acres," he said, ranging from 5,000 to 6,000 square feet on 2.5 to eight acres. Three lots remain.

Land prices there, too, have dropped dramatically, although the "building lots valued at $600,000 that dropped to $300,000 in the recession are back again," McGinn said.

All three builders cited the lending climate as a barrier to total recovery of the new-home market.

"In October, I sold two homes," Kojeski said. "When I went to the bank for financing, they reminded me that I was entitled to money for just one house a year.

"They didn't care, even though I had sold two houses," he said. "Fortunately, I deal with more than one lender."


215-854-2472 @alheavens

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