This post was contributed by a community member. The views expressed here are the author's own.

Business & Tech

A Tale of Three Builders Fighting to Survive

The boom long over, one contractor turns to black angus farming.

Is the home building industry in Elmhurst showing signs of recovery?

It depends whom you ask.

At the end of July 2009, Elmhurst issued 19 new home building permits. Thus far in 2010, the city has issued 23. That's a far cry from the 235 issued in 2004, but Elmhurst Building Commissioner Bruce DuBiel is optimistic. His department tracks and issues permits for new construction, remodeling and demolition.

Interested in local real estate?Subscribe to Patch's new newsletter to be the first to know about open houses, new listings and more.

"We don't generate business for new permits," he said. "We just process permit applications so there's plenty of construction going on in Elmhurst."

While the most significant development going on right now is commercial, like the $600 million hospital project and the $70 million Park Place senior housing project, DuBiel isn't writing off the single family home market.

Interested in local real estate?Subscribe to Patch's new newsletter to be the first to know about open houses, new listings and more.

"The increase in new home permits is significant, because most new homes here carry a price tag of between $700,000 and $1.2 million," he said.

So, what are the builders saying? Their visions for the future vary.

What's old is new again

Bob Cler has been building homes in Elmhurst and nearby towns for more than 25 years.

"I started with remodeling and doing rehabs on spec," he said. "In time, the demand for new housing grew."

His business—and the competition—really took off in 2003. That's the year Chicago magazine named Elmhurst one its top communities in which to live.

"Builders would find property for sale," he said. "If it wasn't good enough to rent, then it was bad enough to tear down. We even passed out flyers to homeowners asking if they were interested in selling their house (to) tear it down and build a spec home. At one time there were more than 100 spec houses on the market in Elmhurst."

While 2004 was like a dream for builders, "anyone who had a sign was a builder," Cler said. And that eventually led to the current situation.

When builders started frantically buying up properties on the south side of Elmhurst, "they drove up the cost of properties overnight. They grossly overpaid for their properties, and now they're the ones stuck with the empty lots all over town," he said.

Often, those same builders were the ones building lower quality homes, he added.

What's different now from when the "tear-down phenomenon" began some 20 years ago, is that today there are fewer vacant lots to be had. And customers are the ones snatching them up, not home builders.

"The tables have turned," Cler said. "Customers are in the driver's seat. They buy the lot, hire an architect who draws up the plans, then bid it out to builders."

All of that adds to the cost of doing business, Cler said.

"Today when I build a new home, I'm also competing with the homes I built years ago at current market value," he said. "I can't afford to sit on properties forever."

To stay competitive Cler has to come up with unique and more economical designs, which he said is difficult to do with smaller lots. He's also gone "back to his roots" by building additions to medical and commercial buildings.

Although many Elmhurst residents are in need of renovations after recent flooding, Cler has not committed to many basement rehabs, in part due to new energy efficiency standards mandated by the state that dictate more efficient windows, doors and lighting, and increased insulation in walls, floors, ceilings and hot water systems.

"It's a tough time to implement new requirements on builders," Cler said. "Something also has to be done about high taxes, lending and issues about flooding."

But Elmhurst is a good community with strong leadership, he said.

"Any town that will be first in line to recover will be Elmhurst," he said.

Staying in business and more

Jeri Knighton, co-owner with husband, Sam, of Knighton Construction, said despite the fact that their office on York Road is for lease, they are still in business. They just don't have any active jobs.

"The train that took us to the edge of the cliff then came to an abrupt halt," Knighton said.

Knighton Construction, in business for 25 years, is one of the original builders of luxury homes in Elmhurst. During the low taxation years in the 1990s, the company also concentrated on building hospitals. However, when those tax credits expired, Knighton Construction re-entered the Elmhurst housing market. Two years later and just prior to Sept. 11, 2001, Knighton completed the 27 luxury town homes at Yorkshire Court on Butterfield Road.

Then the bottom fell out of the housing market.

"There just wasn't enough work in Elmhurst," Knighton said. "We built our last custom home in 2008, and it took over a year to sell it."

The Knightons have turned to another source of income: farming. They have owned a small farm in Michigan for a number of years but just recently started raising black angus cattle.

"It used to be that builders had control over their projects," she said. "Now customers are buying lots, shopping plans and letting price drive their decisions. What they don't realize is that the hard costs of materials vary from house to house, and those costs have not come down as have property values.

These days, Knighton spends most of her time bidding on projects.

"I've always loved to build and custom-design homes for people," she said. "We never built a cookie-cutter home. We will continue to operate, but I don't think (the business) will ever go back to what it was."

Looking ahead to green

Steve Buonsante, president of Mondo Builders, started his custom home company in 2003.

"It was a great time to start a business," he recalled. "I bought my first lot and built a spec home. It was easy to sell, and everyone benefited from the increase in equity. It's completely the opposite now."

An Elmhurst native and licensed real estate agent, Buonsante credits his conservative approach to growing his business with his ability to weather the downturn.

"I've never turned away a customer or wished that I had never gotten into this business," he said. "I saw (the downturn) as an opportunity to adjust. I stopped buying empty lots, pulled back on my spec homes and let the customers come to me."

Buonsante incorporates a lot of "green" materials into his homes, using the latest innovations in renewable resources, eco-friendly technology, smart energy like geo-thermal heating and cooling systems, and clean design.

He recently completed a modern home with green building features at 386 Mitchell Ave. But a house doesn't have to be modern in design to be green, he said.

"It just so happens that people who like green building, like modern design," he said.

It takes a lot more work and a lot more time to educate the client when building green, he said. Because no two jobs are the same, there's also a learning curve on his part and that of his subcontractors.

"We really pay attention to the details," he added.

He's OK with bidding for jobs, because he has computerized his systems so bidding and billing go hand in hand. He has three projects lined up for next year.

"Yes, it's a bad market and it's difficult to bid for projects, but Elmhurst is a good town," he said. "My goal is to keep growing the company and keep the signs in the yard."

We’ve removed the ability to reply as we work to make improvements. Learn more here

The views expressed in this post are the author's own. Want to post on Patch?