It's actually been a pretty good year for Larry Wisdom's company, Keystone Custom Homes, which built and sold about as many homes in 2008 — 300 — as it did in 2007.

And if you think the status quo is nothing to get excited about, you haven't paid much attention to the national housing market lately.

The market continues to struggle; locally, home sales in Lancaster County are down about 23 percent so far this year. And while the housing crunch has had a profound effect on those buying and selling homes, those who build homes are facing tougher times than they've seen in more than a decade, or longer.

Some 11 percent of all local jobs are in construction (the figure includes commercial as well as residential construction), higher than both the state and regional average. Other businesses, from financial services firms to title companies, support the industry. As the housing crunch continues, all these firms are likely to shed jobs; some industry insiders say many won't survive.

But that might not be the worst thing in the world.

The county's booming real estate market has had its downsides: skyrocketing home prices, for instance. The housing "correction," said Randy Hess, president of the Building Industry Association of Lancaster County and himself a real estate agent and developer, has already brought home prices down here. Hess contends this will make new homes more affordable for a broader range of consumers.

In many ways, he said, a "correction" is akin to a forest fire. Sometimes the "dead wood" needs to be cleared for the industry to thrive.

"A 'free market' economy should flush an industry periodically," said Hess. "It's painful, but necessary."

Down 50 percent
Through September, housing starts in Lancaster County were down more than 50 percent, from 1,600 in 2007 to 780 this year. But the figure is misleading, Hess said, because it includes apartments: In the first nine months of 2007, 832 apartment units had been built — compared to a mere 131 this year.

Still, single-family housing starts are also down, from 704 through September 2007 to 617 this year.

"Builders are just not willing to spec [build on speculation of a sale] as many homes as there have been in previous years," said Hess.

"I think people need some time to get over the shock of looking at their portfolios before they get back to major purchases," he said.

Nationwide, home builders are stumbling. Horsham-based Toll Brothers Inc., one of the country's largest, reported a 41 percent fourth-quarter loss last week. The company does no business here, but Texas-based D.R. Horton, the nation's largest home builder, does. That firm last week said it expects to lose up to $900 million in the fourth quarter.

Locally, the situation is nowhere near as bleak, though Keystone Custom Homes' Wisdom said that "there is absolutely a market correction, and it's fully developing in Lancaster County."

Keystone, involved in projects in Lancaster, York, Dauphin, Lebanon and Chester counties, is actually growing, said Wisdom. He hopes to have opened "four to five" new home communities by the end of this year. Next year, the company could open as many as nine.

But, Wisdom acknowledges that "that is not reflective of the market."

"I think we will see consolidation of builders in our area, some will have gone out of business, and some [from other regions] will have gone out of our area."

BIA spokeswoman Kylee Bowman said there have been layoffs, and more might be inevitable. Many builders are "trying their absolute hardest not to lay off workers," she said. "I have heard some members saying that they're cutting back hours for their teams."

Hess, BIA president, wrote in the association's September newsletter: "We know that there are those fly-by-night contractors and related businesses that perhaps jumped into the market a few years ago to take advantage of a booming, easy market. Many of them, for the good of the whole community, needed to get out of the business.

"An economic downturn tends to take care of that," he wrote.

'Managing' growth
And other things, too.

Lancaster County officials are forever talking about the need to manage growth here. The economy seems to be taking care of that, too.

The number of subdivision and land development applications submitted to the Lancaster County Planning Commission this year is on pace to decline for the second year in a row, said chief county planner James Cowhey. The amount of acreage developed is also declining — from 18,332 acres in 2006 to 16,427 last year, to a projected 14,896 this year.

Cowhey said he's reluctant to speculate, but it does seem that the economy "is starting to affect development." The development that is going forward, he said, is "a little more compact, with more lots on fewer acres."

The number of proposals for mixed-use developments with commercial and residential structures side-by-side has skyrocketed — from 36 applications in 2006 to 158 last year, to 260 through the first 10 months of 2008.

That might help bring down home prices, which Hess thinks is key.

"There have been concerns voiced in recent years about the skyrocketing prices of Lancaster County homes," he wrote in the BIA's September newsletter. "You may no longer have five potential customers in a bidding war over every home, but this 'buyer's market' allows less frenzied and a more deliberate climate for those looking to purchase a home."

In the long run, he said, that's good for the stability of the industry.

"Buyers now are looking for value all the way through their purchasing decision," said Rob Bowman, president of Charter Homes in Lancaster, one of the biggest regional home builders. "We're sticking to the philosophy we've always had, of great locations and great value," and he said his company is not pulling back: "We've got to make sure we've got the inventory of land and lots."

Charter Homes' most ambitious project — the proposed "Independence" development in East Hempfield Township, which would have involved 3,000 homes on 309 acres — has been shelved indefinitely, Bowman said. But his company is in the process of seeking rezoning of two parcels in Manheim Township, the "Gammache tract," on which it hopes to build as many as 207 homes on 45 acres.

Keystone Custom Homes also has similar neighborhoods in the works, including a proposal to build 347 homes on 64 acres on Millport Road in West Lampeter Township.

The bottom line, said Wisdom, is that there are still more buyers out there — and bad times won't last forever.

"Once you get past all the gloom and doom, what we're experiencing is a very typical market correction," he said. "I've been through four of them, and we will come out of it with companies that are better run — and an industry that's stronger."

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Gil Smart is associate editor of the Sunday News. E-mail him at gsmart@lnpnews.com, or phone 291-8817.