Dan's Papers - September 12, 2008

With housing starts at record lows and the real estate market suffering, how's the building business faring? Many aren't saying, but local builders Ed Bulgin and Tim Sharp went on record to give Dan's Papers some industry insider perspective.

Bulgin, of Bulgin & Associates in Southampton, gave a rare glimpse into his world of building "ultra high-end homes" here on the East End. By "ultra high-end," Bulgin means homes that cost $15 million and up. Bulgin said his company has around 10-15 projects going most of the time and will continue to do so into the next two years. "They are all in different states," he explained. Some take years to go through the whole process of building permits, design and then completion. Bulgin, who has been building on the East End for 30 years, founded Bulgin & Associates about 25 years ago. A competitor said, "They have all the best big projects." Bulgin is one builder who doesn't need the therapy the National Builders Association is reportedly suggesting for and offering to builders caught in the housing slump, which is critical in some parts of the nation. In fact he claims the "market conditions" have enabled him to hire better-quality help and, in effect, is making the present work go smoother. "The speculative market is perhaps hurting," he said. "That's the market where the builder goes in without a client (buyer). The present conditions will lead to a change for the better. This is a market correction, a return to quality work."

What Bulgin is implying is that when things were red-hot there were some unqualified builders getting on-the-job experience at the cost of unknowing clients. While he was never in this situation, he saw others being affected by it. He "staggers" his projects so that his workers can all do their jobs in a timely manner.

Bulgin also says he sees more hesitation in the $5-10 million range, causing a slowdown in that bracket. While admitting there are always "wild cards" in building, meaning permits being held up or not granted, and clients changing their minds, things can and do happen. He added that his business is mostly residential, with only some minor commercial projects for select clients.

Tim Sharp, a builder based in East Hampton, concurred with much of what Bulgin said. Sharp has a working relationship with Bill Chaleff of Chaleff and Rogers, a company that keeps busy because they specialize in the niche market of building "green homes," which, due to the oil prices, is still a hot area. He says that that speculative market had a lot of workers building 10,000-square-foot homes, but that has all but stopped, with many foreign workers going back home. "It's that bad. A 10,000-square-foot home has a lot of workers," said Sharp. "Those speculative builders had a lot of sub-contractors who are now without work." Sharp, a builder for 10 years, sees no end in sight for the slump in the speculative home building market, and says the market for unsold finished homes is currently flooded.

With the entire country attuned to the daily twists and turns of the mortgage crisis, the end never seems to be in sight. However, if you are well financed this may actually be a good time to build your dream home - the skilled workers are available, at the right price. A correction has happened. Common sense has returned to the market.