BETH W. ORENSTEIN, The Morning Call
Tony Caciolo of Monogram Custom Homes in Coopersburg is building three upscale houses in Hickory Hill in Upper Macungie Township, a stone's throw from where Beazer Homes USA, a national builder, is building Morningside, an enclave of 31 luxury dwellings.
Traditionally, builders in the Lehigh Valley have been locals such as Caciolo, who has an master's degree from Lehigh University and who builds between 25 and 30 houses a year.
Chuck Hamilton, executive director of the Lehigh Valley Builders Association, says that about 275 of his group's 900 members are builders. "And of the builders, I don't think there are more than 20 that aren't from the immediate area," he says.
Yet in the last few years, a number of national builders, often publicly held companies that build thousands of homes a year, have bought land and started large developments in the Lehigh Valley.
In the last two years, "the national builders have started coming back into the market," says Anthony Bisconti, president/broker of The Paragon Real Estate Group in Upper Macungie Township.
David Jaindl, president of the Jaindl Land Co., says "out-of-town tract builders have been actively looking in the area and talking to us" and they're doing more so recently. Jaindl won't name the national builders with which he's negotiating. But, "we're talking to several," he says.
What's brought the national and New Jersey builders back to town?
Realtors and landowners see a number of forces at work -- most of them economic.
The most obvious spark is the booming economy, which has spurred a building frenzy everywhere, including the Lehigh Valley. Nearly 2,500 new houses were built in Lehigh andNorthampton counties last year, according to the Pennsylvania Builders Association. That's up more than 13 percent from the 2,165 that were built in the two counties in '98.
The national builders are "seeing a very bright market here, and coming in with formulas that worked for them elsewhere," Hamilton says. Their formulas include offering a limited number of models that can be upgraded with options, and building tract developments with somewhere around 30 single-family dwellings to as many as 400 houses and townhouses.
Indications are that mortgage rates, which have been rising since last summer, may be putting the brakes on home building. The latest report on new house sales from the U.S. Department of Commerce showed a decline of nearly 6 percent in April. However, Hamilton says, while nationally the economy and home building may be slowing, "we're not seeing that in the Lehigh Valley -- not yet."
News that Lucent Technologies' Microelectronics division was building a new corporate campus in Hanover Township, Lehigh County, also may have helped bring the national builders back.
Local builders say they welcome the competition although they don't see it as such. The locally based builders claim to know the market better than the out-of-towners and say they can better deliver what local buyers want. "Local builders have the definite advantage of knowing their audience," Hamilton says.
Caciolo says his upscale houses are custom built vs. the standard models with upgrades and options that national builders typically offer. "When you deal with national builders, they say, `Here are the six plans we offer, and this is it.' You're not able to add or twist things around like you can with a custom builder. People don't like that here," he says.
As in the battle between the Wal-Marts and the mom-and-pop retailers, the local builders also say they surpass the national firms on service. "Beazer Homes is a big, national company. A buyer is not going to be able to pick up the phone and call Mr. Beazer like they can pick up the phone and call Tony Caciolo," Caciolo says.
The national and regional New Jersey builders who have come to the area recently counter that they not only build a quality house but also offer quality service and name recognition that is important, especially to relocating buyers who may be unfamiliar with the area.
"The labor portion of the house is fairly stable whether you're a national builder building 25,000 houses a year, or a local builder building 25 houses a year," he says. "There may be some economies-of- scale with them, but it's not enough that I've seen it be able to make a difference."
Jaindl says when it comes to selling property, his company doesn't forget the local building firms with which it has dealt through good and bad times. "We're dedicated to the individuals that we've dealt with in the past," he says.
The average price of a four-bedroom, 2 1/2-bath newly constructed house in the Lehigh Valley was $243,000 during the first quarter of this year, an increase of 6.6 percent over last year, according to the Lehigh Valley Association of Realtors..
Opinions vary on whether the national builders will stick around this time, unlike the late '80s. The national firms don't even see it as a question while the local builders and some Realtors are skeptical.
However, some local builders expect the national builders will leave when the market softens, and they say that day may not be too far off with the economy beginning to show signs of weakening. The problem, the locals say, is that the national builderscan't make the numbers that they're used to and that they need to maintain their large operations.
According to Builder magazine, Beazer built 7,804 single-family houses in 1999. That's more than three times the total number of dwellings built by all builders in the Lehigh Valley, Hamilton says.
"Do I believe that all the national builders here now will still be here in five years? No," Jaindl says. "But," he says, "the ones who evaluate the market and respond to market needs, they'll survive."
Copyright The Morning Call. Reproduced with permission.