Ed Diller calls himself the "Lot King."

And for a while, it was good to be the king.

Diller, a Realtor with Long & Foster Real Estate, likes to match builders or developers with an available piece of ground. In fast-growing Lancaster County, it kept him pretty busy.

But earlier this month, he came upon some land near Marietta zoned for high-density development. The owner was willing to make a deal. Diller started working the phones.

Then he waited. And waited. "Nobody called me back — I didn't even get a return call!" Diller said, an edge of frustration in his voice.

Not that Diller can blame the builders. The industry is in the dumps. "You can't start work on a project and tell your subcontractors, 'Guys, we're not sure we'll be able to pay you,' " Diller said.

Instead, the homebuilding industry in Lancaster County has downshifted — to its slowest pace in more than two decades.

Figures from the U.S. Census Bureau show that 1,045 residential building permits were issued in Lancaster County in 2009. It was the fifth annual decline in a row; the number of permits issued last year was less than half those issued in 2003, when 2,138 were issued countywide.

The value of construction has fallen as well, down by 43 percent over the past three years. And some local municipalities have seen a virtual halt in new residential construction.

The struggling housing market and broader economy are to blame, say builders, developers and local municipal officials. Nonetheless, many see the numbers as indicative of a sea change: The era of go-go residential growth in Lancaster County may have drawn to a close.

"I don't know if we'll ever get back to the way things were in the late '90s and early 2000s," said Dan Zimmerman, Warwick Township manager. "And I don't know if we want to.

"It's a different world now."

Tracking the decline
The nationwide housing boom of the early to mid-2000s kept builders busy in Lancaster County.

But builders here had been in overdrive for decades.

On average, more than 1,800 residential building permits were issued annually between 1990 and 1999, according to census statistics, the vast majority of them for single-family housing.

And while there's no direct correlation between the number of building permits issued and population growth, the former is seen by analysts as a leading indicator of the latter. Indeed, said James Cowhey, executive director of the Lancaster County Planning Commission, the county added an average of 4,900 residents per year in the 1990s.

The boom continued well into the 2000s, according to census statistics.

The number of permits issued here topped 2,000 in 2002 and 2003, and fell just short in 2004, at 1,972.

Then the erosion began.

In 2005, the number fell to 1,711; in 2006, it dipped slightly to 1,703. Then the bottom fell out: In 2007, it dropped a full 26 percent, to 1,252. In 2008 came another slight decline, to 1,198.

Then, in 2009, came another 13 percent drop.

Some local municipalities have seen an even more precipitous decline. For example, throughout the 1990s and early 2000s, Warwick Township was one of the fastest-growing local municipalities. In 2000, the township issued 171 building permits — all of them for single-family homes.

In 2009, it issued nine — seven for single-family homes, and two duplexes.

"The township's not built out by any stretch," said Zimmerman, the township manager, "but the developments going in are much smaller now. The last few years have been at 20-year lows" in terms of the number of new homes built, he said.

West Lampeter had been another rapidly growing municipality. In 2005, the township issued 118 building permits. Last year, it issued 14.

"Things have virtually stopped for the past few years," acknowledged Dee Dee McGuire, township manager. So far this year, she said, things seem to have picked up. "We do hope for the economic situation to improve for everyone," she said, "but I do not anticipate the kind of growth that we saw in the 2003-2005 time frame."

Other examples:

•East Hempfield Township issued 171 building permits in 2005. In 2009: 43.

•Manor Township, 223 in 2005, 33 in 2009.

Several municipalities have held their own. Manheim Township, for example, actually issued more residential building permits in 2009 than in 2008 or 2007. Lancaster Township has actually seen a major surge in building permits — from 37 issued in 2006 to 108 in 2008 and 100 last year — due almost entirely to the construction of Hawthorne Ridge, which once complete will feature 161 townhomes, 62 single-family residences and 40 duplexes.

Some local officials say many builders and developers are waiting in the wings, holding off to see if the economic environment improves. "We have several large projects that are approved and ready to go as soon as the developer decides to break ground," said Manheim Township Commissioner Carol Simpson. And she sees some indications that conditions are improving: "All of a sudden I, along with our planning staff, have a number of meetings set up in the next six to eight weeks with people who want to bring projects, mostly mixed-use, in to us for a preliminary conversation," she said.

Proceeding carefully
Elsewhere, though, builders remain cautious.

"Builders have really cut production, as we should have," said Randy Hess, president of Hess Home Builders. And many builders who are pushing ahead are building lower-cost housing than in the past. Others would like to follow suit, but "we are a little hamstrung," Hess said.

"Much of that is regulatory, but some of it is self-inflicted as well, depending on what you have invested in your land," he said.

Diller said development costs are another factor in the malaise: "Municipalities joined in the frenzy by requiring developers to spend more to improve the infrastructure," he said. "Sewer and water hookups got to be more expensive. Storm-water requirements became onerous. .... Simply put, it has gotten to the point that developers can't make the numbers work. They can't come close to making a profit. The array of increased costs got too high."

In order for that to change, he said, land prices are going to have to plunge.

Mike Garman, of Garman Builders, Ephrata, agreed. "I go to public sales where someone will buy a house for $185,000," he said. "Well, it would cost us $150,000 to build that house, and $100,000 for the lot.

"At some point the risk just isn't worth the gamble."

Downsizing trend
As a result of the slowdown, the homebuilding industry, long one of the biggest players in the local economy, has been contributing less.

Many builders "have been downsizing over the last couple of years," said Kylee Bowman, a spokeswoman for the Building Industry Association of Lancaster County. There's a silver lining to that, she said: Many employees who have been laid off "have been starting their own businesses — as remodelers, carpenters, electricians, designers and more," she said. "There still is a good demand for the small remodeling projects.

"Unfortunately, that's not what keeps business booming," Bowman said.

In January, the National Association of Home Builders issued a report on the economic impact of homebuilding in Lancaster County, concluding that in 2009, the worst year in recent memory, the industry nonetheless generated $103.6 million in local income, $7.4 million in taxes and other revenue for local governments, and 1,774 local jobs.

Garman said his company had been doing the work it once subcontracted out: "We keep our guys busy, but the subcontractors suffer," he said.

But the downturn has affected more than just the construction industry itself.

Municipalities derive revenue from new construction; some say that income stream has diminished with the drop in building permits.

"We were up to $650,000 in 2005," said Bob Krimmel, East Hempfield Township manager. Now, the township budgets for less than half that amount of revenue.

"I almost hesitate to say this, but it's good for the taxpayers when you have some growth," he said.

Added Warwick manager Zimmerman: "You want to have growth, because it provides jobs and income. We were overbuilding for a number of years, now we're at the other extreme — I'd love to see us get somewhere in the middle."

And Cowhey, executive director of the Lancaster County Planning Commission, worries that a slower rate of growth might make issues like growth management or farmland preservation seem less relevant, less necessary. "The days of 11 percent population increase, as we saw during the '90s, are over," he said. Until the recession hit, he predicted the growth rate this decade would be 8 percent. It may be lower, given the slowdown of the past few years; new census figures won't come out until next year.

But even though 8 percent is "not explosive, it's not like the '80s and '90s, but it still means the county is changing," Cowhey said. "And that change should be managed if we are going to retain Lancaster County's unique sense of place."

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