GORHAM — Workers were siding the back of a three-bedroom Cape last week in the new Wagner Farm subdivision, rushing to get the $237,000 house ready for a family to move into next month. Next door, a steam shovel was digging the foundation for a $281,000 Colonial that recently went under contract.

“This house has to be done by the end of June,” said Bill Risbara, a principal at the Scarborough-based Risbara Bros. construction company, which is developing the 42-lot neighborhood in Gorham.

Homes must be under contract by April 30 and completed by June 30 to qualify for the extended $8,000 federal tax credit for first-time homebuyers, and the $6,500 federal tax credit for repeat homeowners.

Those deadlines, along with a snow-free winter, low interest rates and indications that prices have hit bottom, seem to be reviving the home-building industry in southern Maine.

It’s a tentative revival, though. Continued concern about job losses is keeping potential buyers on the sidelines. And builders wonder whether the recovery will lose steam after the federal tax credit programs expire. Nationally, sales of new homes fell in February for the fourth straight month and now stand at the lowest point on record.

Despite these worries, there’s a sense of optimism this spring among some of southern Maine’s top builders. Risbara is a family-owned company started in 1968, so it has weathered a few economic downturns. In 2008, for example, during the depths of the recession, housing starts in southern Maine plunged to their lowest level in 17 years.

This winter, housing starts are well above the same period last year, according to Construction Data New England of Windham, which tracks activity in the region. Builders reported 77 housing starts in southern Maine for the first two months of 2009. This year, they are reporting 136.

Lower prices are contributing to the activity. As overall real estate prices have fallen, hungry builders looking to stay busy are competing not only with one another, but also with well-priced existing homes.

The price drop in new construction is evident at Bittersweet Banks, a 13-lot Risbara subdivision in Scarborough that features higher-end homes on wooded, 1-acre lots. Risbara motioned to a $350,000 Colonial being framed and roofed.

“That would have been a $430,000 package three years ago,” he said.

Financing is available for qualified buyers, Risbara and other builders say. While many Mainers are struggling with unemployment and eroded home values, there are two-income families, empty-nesters and other residents who can handle the mortgage payments.

They typically use local lenders and federal housing programs to help make these purchases. Risbara is working with a community bank that features a 10 percent down loan with no personal mortgage insurance, and an advance on the $8,000 tax credit to pay closing costs.

Helping buyers pull together the money is also a priority at Chase Custom Homes & Finance of Windham, where the company offers in-house financing for construction loans.

Chase has 19 houses under construction. Crews are working six days a week, and the company has 26 employees, said John Chase, the founder. That’s half the number working three years ago, but sales are up 14 percent over the same period last year, and he just took on a third salesperson.

“I wouldn’t have hired another employee if I didn’t have confidence,” he said.

Chase has been building since 1986, so he too has survived a couple of deep recessions. He took advantage of the distressed market to buy land, picking up a 40-lot, riverfront subdivision in Westbrook, Presumpscot Estates. And he tries to market the appeal of a new house at a time when there are plenty of existing homes to pick from.

Depressed lumber and labor costs, and lower profit margins, are making new construction more competitive with existing homes, Chase said. He tells potential customers to shop around, find a home they like, and he’ll see if he can build a new one for a comparable price.

“That’s one of our best sales approaches,” he said.

Falling prices also have breathed some new life into construction for the affordable housing market.

Mark Patterson of Patco Construction closed on 27 homes last year in southern Maine, and his goal is to hit a similar number in 2010. His most popular model is a 960-square-foot ranch with three bedrooms and one bath. He can build the house for $114,000, minus the lot.

In Sanford, for example, where his company is based, Patterson shoots for a $150,000 package and is having good results. Of the seven homes he now has under construction, five are for first-time homebuyers who are taking advantage of the $8,000 tax credit.

“It’s one more thing that is helping people make the decision,” he said.

At the Wagner Farm subdivision, Kim Walker is benefiting from the federal incentives. She and her husband sold their home in Windham last fall to a first-time homebuyer.

Now they’re waiting for the three-bedroom Cape — which was having its siding installed last week — to be ready for their family. They’ll get the $6,500 federal tax credit for existing homeowners who replace their house.

The Walkers started their house search looking at foreclosures and fixer-uppers. But they concluded that they could get a new house, with a mudroom and office, for a comparable price. They like the idea of moving to a new neighborhood served by public water, sewer and natural gas.

“I get everything brand new, and I don’t have to fix anything,” she said.

Wagner Farm is rising on 24 acres in an old strawberry field. The public utilities allow for high density and small lots, typically a quarter-acre.

A year ago, Risbara had 50 lots available in subdivisions in Gorham and Scarborough. He’s down to 16 lots now at Wagner Farm and is preparing to buy more land.

“We’re in an acquisition mode now,” he said. “We haven’t bought land in two years, and we’ll be out of inventory by the end of the summer.”


Staff Writer Tux Turkel can be contacted at 791-6462 or at:

[email protected]


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