Builder suffers through housing decline

By Brian McNeill

Published: October 8, 2008

A respected Charlottesville regional homebuilder is facing foreclosure on more than 20 properties worth a total of at least $3.5 million.

Church Hill Homes has defaulted on payments for 13 residential properties in Albemarle, five in Fluvanna County, two in Charlottesville and one in Greene County.

The firm’s struggles underscore the travails facing the area’s homebuilding industry in an extremely lackluster real estate market.

“It’s been tough,” said Josh Goldschmidt, co-owner of Church Hill. “We’re trying to do the best we can with what we’ve got.”

During the hot housing market of the past few years, Church Hill’s strategy was to snap up vacant land throughout the region. At the time, Goldschmidt said, sales were so brisk that the company thought it was at risk of running out of home sites.

When the real estate bubble burst, however, Church Hill found itself saddled with many properties that had declined in value and were simply not selling.

“We’ve been trying to clean stuff out as best we can,” Goldschmidt said. “But at the end of the day, we’re stuck with a lot of land that is worth less than what we paid for it.”

Church Hill is among the Charlottesville region’s most prominent homebuilding firms, owning at least 119 residential properties in Charlottesville, Albemarle, Fluvanna and Greene, according to property tax records.

When the company’s difficulties came to a boil over the summer, Church Hill Homes hammered out a bailout deal with Richmond-based homebuilder Eagle Construction of Virginia.

As part of the deal, Eagle Construction took on 11 of Church Hill’s properties at Belvedere. Goldschmidt and his Church Hill partner, Jamie Spence, became full-time employees of Eagle on Sept. 1, though they are continuing to market Church Hill’s existing inventory.

“We’ve landed at a great company,” Goldschmidt said.

Church Hill’s properties now in the foreclosure process include three homes at the Belvedere development off Rio Road in Albemarle County. The sites all were bought as part of a $2.24 million package.

Elsewhere in Albemarle, the foreclosures include seven vacant sites and two houses in the Wickham Pond development in Crozet. The Wickham Pond properties are assessed at a total of $990,000, according to tax records.

The final Albemarle foreclosure is a $479,900 house under contract in the Old Trail development in Crozet.

In Charlottesville, two of Church Hill’s condominiums are facing foreclosure. One property is a $599,200 luxury residential unit in the ACAC complex on Monticello Avenue.

The other condo, assessed at $732,000, is in the same building and apparently served as Church Hill’s offices, according to city records.

The Fluvanna County foreclosures include two 4-acre vacant sites in the Centre Hill Estates development, as well as two small vacant sites and one house in the Fox Glen development, according to county land records.

The Greene County foreclosure is a roughly half-acre vacant lot in the Water’s Edge at Lake Saponi neighborhood and is assessed at $126,000.

Each of the properties will be on the auction block in mid-October at various county courthouses.

Paul S. Bliley Jr., the trustee acting on behalf of Union Bank and Fulton Bank in the Church Hill foreclosures, said he has not been involved in such a large-scale foreclosure proceeding since the savings and loan crisis in the early 1990s.

“I haven’t done anything like this in a long time,” said Bliley, a Richmond-based lawyer with Williams Mullen. “The market dries up and [homebuilders] can’t sell inventory and they can’t start new projects.”

The foreclosures do not affect Church Hill’s deal with Eagle Construction, said Jeff Kornblau, Eagle’s director of sales and marketing. “Whatever’s happening is between Josh and Jamie and whoever else,” he said. “We don’t really get involved.”

While Church Hill’s troubles have been the most visible, several other Charlottesville-area homebuilders are also feeling the pinch of the housing slump, said Jay Willer, executive vice president of the Blue Ridge Home Builders Association.

“It’s no secret that this is a difficult time in the real estate business and the homebuilding business,” he said. “Everybody is pretty worried about the economy right now. They’re wondering what’s going to happen.”

Albemarle County has reported that new home construction during the first half of 2008 was at the lowest level in recent memory. The county issued only 266 residential building permits, compared with 575 during the first six months of 2007 and 830 in the first half of 2006.

Despite the ongoing drumbeat of negative financial news, Willer said, there may be cause for optimism. During last month’s Parade of Homes — an annual showcase of local homes for sale — builders reported a higher level of interest from potential buyers than was seen in fall 2007, he said. Plus, Willer added, houses that are priced competitively continue to sell, and it appears that housing prices have finally leveled off.

“Housing prices seem to be pretty much at the bottom,” he said. “They’re not going up, but they’re not going down either.”