Builders contend with soft market, hard regulators 'No one's making any money,' declares association president

November 26, 1995|By Daniel H. Barkin | Daniel H. Barkin,SUN STAFF

A year ago, Dwight S. Griffith was building a house in Harford County in the middle of a 30-acre cornfield.

Local ordinances required him to put a siltation fence around the building lot to -- in his words -- "stop my dirt from going on the dirt that was already there." There was no sediment barrier required around the edges of the 30-acre tract.

"And then they come out and inspect it every three months or so," he said.

Builders don't want to harm the environment, he insisted last week. "But there's got to be some common sense."

Mr. Griffith has spent the better part of his year as president of the Home Builders Association of Maryland (HBAM) fighting to persuade regulators and community groups to take a "common sense" approach to his industry.

He views the HBAM's public relations offensive as nothing less than a battle for survival. Since the late 1980s, the association has seen its ranks dwindle from 1,800 members to 1,200. The HBAM's Woodlawn-based staff will shrink by six people by the end of December, layoffs forced by dropping revenues.

Many builders have simply gone out of business.

"The sales volume is just not there," said Mr. Griffith, a BTC 38-year-old Harford custom home builder and remodeler.

"No one's making any money. I just spoke to a builder who does $20 million a year and he made 1 percent," said Mr. Griffith, who will be succeeded next month by John Martonick, the HBAM's vice president/treasurer. "The only way we're selling houses is by giving them away, and there comes a point in time when eventually we have to make some money."

Indicators of the market's softness are the incentives being offered by builders in subdivisions of 20 new units and larger.

Nearly $6,300 is being offered on typical new homes priced at $187,806, according to the Legg Mason Realty Group. Usually, these are coming in the form of the builder paying some of the points and other closing costs, or providing free options (such as a fireplace).

Maryland builders are being compelled to offer higher incentives than their Virginia counterparts because of higher closing costs, according to Harvey N. Singer, senior vice president of the Realty Group.

There's only so much, in Mr. Griffith's view, that builders can do to stimulate the market. That's largely a function of consumer confidence, he says. The job fears of workers at large Maryland employers have dampened demand.

Sales have recovered somewhat from a dismal 1994, when Baltimore new-homes sales dropped nearly 14 percent, and Mr. Griffith acknowledges that they are "slowly improving."

"We'll have a good month here, a good month there. But we have a long way to go to get to where we need to be," he says.

He voices a belief widely held in the building industry that state and local governments will spend millions to retain existing businesses and lure companies to Maryland, but they continue to shower "disincentives" on one of the most important employers, the home construction industry.

"The bottom line is what we're doing is not a dirty deed. We're building houses for Americans," said Mr. Griffith, who began building homes 18 years ago. "There's got to be somewhere that people can buy what they want, and there is room to do it, and there are ways to do it responsibly.

;/ "So the idea is to stop the disincentives."

Seeking relief

Mr. Griffith has continued to lead a campaign that began with his predecessor, Clark Turner. The HBAM -- which has members in Annapolis, Baltimore and the counties of Anne Arundel, Baltimore, Carroll, Cecil, Harford and Howard -- has been meeting with local government officials.

Mr. Griffith and other builders are seeking relief from construction moratoriums and increasingly tougher local officials who are enforcing slow-growth policies. Local opposition to development is fueled by citizens who fear the impact of unfettered building on roads and schools.

Mr. Griffith and the builders have come armed with Legg Mason studies on the economic impact of the housing industry that argue that the taxes that flow from new subdivisions are more than the cost of the government services they require.

Mr. Griffith and other leaders of the Maryland building industry met last spring with Gov. Parris N. Glendening and Cabinet members to press their case against more constraints on their business.

Whether this effort bears fruit may be seen in the next session of the General Assembly. Mr. Griffith says the industry is far better prepared to defend itself today than in the past.

"It goes beyond the fluffy stuff, you know, 'We provide housing and shelter and all those wonderful things.' " It gets down to dollars and cents," he said.

The dollars and cents come to $752 million in annual wages paid by Maryland homebuilders, who employ 94,000 workers, around 8 percent of the state's work force.

The builders argue that government fees and taxes are pricing buyers out of the market by adding $19,000 to the cost of the average single-family home.

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