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Construction of new homes heats up in region’s suburbs

Dan and Kelly Connors wanted to build a new home.

The couple – an attorney at Nash & Connors PC and a human resources professional, respectively – had lived in a 22-year-old, four-bedroom home in Orchard Park since 2011. They were happy with it, but it needed new windows, a new roof and some updating.

So they built a new, 3,000-square-foot, four-bedroom house in the same Hidden Oaks neighborhood in which they already lived. “We just got to the point where we knew this was going to be the last house that we lived in,” said Dan, 41.

For the past few years, the spotlight has been on Buffalo’s renovation boom, as developers convert old commercial buildings into new apartments. But after more than a decade of steep declines, homebuilding has come back in the suburbs, as well. Builders say a lack of available land is keeping the numbers in check, but from Wheatfield and Clarence in the Northtowns to Lancaster, Hamburg, West Seneca and Orchard Park in the south, nearly 2,000 new homes have been erected in new neighborhoods during the past few years, with more on the drawing board.

“There was a tough time, when we were moving along slower, but the demand has really picked up,” said Patrick A. Marrano, president and CEO of Marrano/Marc Equity, the region’s No. 1 homebuilder.

Scarce land

Homebuilders say they’re struggling with a severe shortfall of open and available land. They say it’s getting much harder to find new places to build, especially large enough plots for entire neighborhoods that still have access to sewer connections and other infrastructure. Much of the inner-ring suburbs are already developed, and a lot of remaining land is tied up by wetlands, environmental hazards, wildlife or historical concerns, deed restrictions, zoning or other limitations, making it much more complicated and cumbersome to advance projects.

“The biggest obstacle is finding good land and getting through the approval process and being able to deliver lots. That sometimes holds back the market,” Marrano said. “It’s a challenge.”

It’s also driving the price of open land significantly higher, making the homes too expensive to build and sell, on top of rising construction, material and labor costs. And without the real estate – the industry’s raw material – homebuilders can’t meet what they say is a much stronger demand than is reflected in the activity.

Land costs generally average about 20 percent of the price of a home, so building and selling a home for $200,000 or less means the land can’t cost more than $40,000. Instead, a home site today generally starts at about $60,000 – which equates to a $300,000 home.

“It seems like the demand is up but we struggle to find home sites that are affordable,” said David L. Capretto, CEO of Forbes-Capretto. “There are a lot of people who have been priced out of the market for new construction because of that.”

Rising nationally

The rise in construction locally matches a national trend that has seen spending on private residential construction reach the highest rate since November 2007, according to the National Association of Home Builders.

Locally, NAHB data shows the Buffalo-Niagara Falls metropolitan area has recorded 171 permits for single-family homes for the first three months of 2016, up 12 percent from a year earlier.

Back in the 1990s, it was not unusual for municipalities in Erie County to issue more than 1,500 new home building permits each year. But after peaking at just over 2,000 in 2002, the numbers fell steadily to a low of 488 in 2011.

Of course, new home construction isn’t happening to the same degree each year in every town or village. For example:

• In Amherst, the number of building permits fell from 258 in 2002 to 54 in 2012. It’s now back in the 80s.

• In Clarence, permits exceeded 200 a year in the early 2000s, but dropped to 47 in 2010. They rose to 139 in 2013 but fell to 84 in 2015.

• In Orchard Park, permits fell from 105 in 2005 to just 25 in 2011, but were back up to 68 by 2015. “The Town of Orchard Park has seen an uptick in new homes the last couple of years,” said Andrew Geist, supervising building inspector. But “we used to issue an average of 100 to 110 annually, so there is still room for improvement.”

• And West Seneca, aside from an odd surge in 2009-2010, hovered in the 20s for several years through 2011, but has ticked back up to 56 last year. “We are still going strong on new home construction,” said John Gullo, the town’s senior code enforcement officer.

Not inexpensive

New construction ranges from townhomes and patio homes to traditional single-family homes. But for the most part, these are not entry-level or small homes, because that’s not what customers are seeking.

Buyers are either moving up from smaller starter homes, or they’re downsizing from significantly larger and more expensive dwellings. Builders say most of their customers are still from the local area, although there is a growing share of out-of-town buyers relocating to the area. And while there are more buyers in their early 30s and even their 20s, most are still established families or empty-nesters, builders say.

So luxury finishes and upgrades are common. And many of the homes are priced well above most existing houses that are listed for sale. Some new townhomes or patio homes start at about $250,000, but many more range from $400,000 to $600,000. In some particularly tony neighborhoods, such as in Clarence, they top out at well over $1 million.

For example:

• Capretto is building more than 150 homes in Waterford Estates and Spaulding Green in Clarence; Hidden Pines and Hidden Meadow in Lancaster; Eagle Heights, Pleasant Acres, Birdsong and Holly Ridge in Orchard Park; and Bear Ridge Estates in Pendleton. The Clarence projects average – or even start – at about $600,000, but the others are less.

• Essex has a patio-home development in Clarence at Essex Green, with 108 lots, ranging from $350,000 to $550,000. It’s building the last 14 in the 64-lot Shadow Woods neighborhood, ranging from $340,000 to $440,000. And it’s starting 35 lots in Cross Creek in Lancaster.

• Marrano, which is still building ranch and two-story homes at Evergreen Landing in Amherst, is starting this year on Princeton South in West Seneca, with 51 lots, and Deer Springs in Hamburg, with 30 lots. It’s also entering its third phase at Greythorne, the exclusive patio home community off Main Street in Williamsville.

Greythorne selling out

Greythorne homes – which have seven different floor plans from 2,200 to 4,000 square feet – start at $450,000 and range up to $1.4 million, with the average price at $750,000. The company started the development in 2008, but it took six years to finish the first phase of 53 homes. The second phase, with 29 lots, is now largely sold out, after 21 closings last year, and the third phase of 35 is getting started. In all, the community is worth $76 million.

Right behind it is the $35 million Windstone community of patio homes, townhomes and condos that Marrano kicked off in January. The subdivision will include 42 luxury patio homes at $350,000 to $400,000, 40 luxury townhomes for $250,000 to $300,000 and 48 villas in the low $200,000 range.

“I think this is testimony to what’s happening in Western New York,” Marrano said. “If we can put a community like this together and be this successful, that’s really positive.”