Charged-up market zaps homebuilders. (low profits due to cutthroat competition in the Chicago,...

Land costs, fees, new rivals hurt suburban players

The good times are killing Chicago's suburban homebuilders.

Rising land costs, high zoning fees and cutthroat competition are making it increasingly difficult for builders to earn profits on starter homes along the region's fringes - once their bread-and-butter market.

Gross margins for exurban developments have tumbled to about 10% from the 15%-to-18% range, forcing builders to scramble for less-costly (and once-undesirable) in-fill properties in already developed suburbs to protect their bottom lines.