Church Hill deal shows soft housing market

A Richmond homebuilding firm has come to the rescue of a struggling Charlottesville-area builder.

Eagle Construction of Virginia is purchasing 11 undeveloped lots from Church Hill Homes at the Belvedere development off East Rio Road in Albemarle County.

Along with the deal, Church Hill’s co-owners, Josh Goldschmidt and Jamie Spence, will become full-time employees of Eagle Construction on Sept. 1.

“The home building thing is tough these days,” Goldschmidt said.

Like many local builders, Church Hill has faced difficulties as the Charlottesville-area housing market slowed considerably. Such home construction firms are finding themselves increasingly saddled with expensive land, but without a reliable revenue stream from frequent home sales.

“Everybody’s experiencing this across the board,” Goldschmidt said.

Far fewer new houses are being built in the Charlottesville area. In its mid-year building permit report, Albemarle County reported its lowest level of new home construction in recent memory. During the first six months of 2008, the county issued only 266 new residential building permits. During the same time period in 2007, there were 575 permits issued. During the first half of 2006, there were 830.

“This is a difficult time for a lot of builders,” said Jay Willer, executive vice president of the Blue Ridge Home Builders Association. “It’s a hard time for the housing market. There’s no news in that. Builders are doing whatever they can to stay in business, protect their assets, protect their customers and protect their employees.”

The slowdown in the housing market is especially tough on “production” builders, such as Church Hill Homes, Willer said. These companies build large numbers of homes, which are generally financed by credit, and then sold off once they are completed. In the market downturn, these builders can find themselves with too much inventory and not enough cash flow to stay afloat.

Wednesday’s announcement that Eagle Construction was bailing out Church Hill Homes was welcome news, Willer said, as Goldschmidt and Spence will continue to work in the Charlottesville area.

“For us, the good news is that we’re going to have these builders continuing to build quality homes here,” Willer said. “That’s good news for our community.”

Goldschmidt and Spence will manage Eagle Homes’ soon-to-be-acquired 11 lots at Belvedere, which will be a 207-acre walkable community of some 700 energy-efficient homes. Goldschmidt and Spence will continue to operate under the Church Hill Homes name, though the firm’s logo has been altered to include the image of an eagle. Goldschmidt declined to disclose the purchase price of the 11 lots.

Eagle Construction previously built several homes in Glenmore and Keswick. The company saw its deal with Church Hill Homes as a chance to expand its presence in the Charlottesville market.

“We saw an opportunity to get into the Charlottesville market and we decided it’d be a good idea,” said Jeff Kornblau, Eagle’s sales and marketing manager. Eagle Construction had worked on projects in Richmond and the Tidewater region, including two prominent communities aimed at “active adults.”

Church Hill Homes LLC still owns several properties around Charlottesville. Goldschmidt said the company will continue to market the properties, even as he is working for Eagle Construction. However, he added, the future of Church Hill has “a lot of uncertainty to it.”

Church Hill has laid off employees as the market has cooled, Goldschmidt said.

Goldschmidt said he is pleased with the deal, saying that Church Hill and Eagle Construction are a good fit. Both firms, he said, share a passion for eco-friendly homes and high-quality construction.