Read the papers and watch the news and allyou see is gloom and doom about the housing market and overall economy, but a combination of recent Builder research and interviews with home builders reveals a different picture: Some smaller, custom home builders with defined niches have held their own through the downturn.

“The upper end is still continuing to go well ... and custom lots in prime locations have held their value,” says Randy Rollo, president of Austin, Texas–based Randy Rollo Homes, a custom builder who builds about 10 homes a year at an average selling price of $1.6 million.

“I’m selling to empty-nester baby boomers who want to be near their kids,” he explains. His clients demand energy-efficient homes and tend to want upscale kitchens and master bath suites, as well as open living areas.

“We’re doing a lot of outdoor fireplaces, outdoor plasmas, built-in grills, and also open courtyards,” says Rollo. His buyers come from Northern and Southern California, Florida, and Oklahoma, as well as other major metro areas such as Chicago and Seattle.

Business is also holding steady for Matt Hipple, who along with his twin brother Michael, runs Michael J Hipple Builder in Williamsburg, Va.

Hipple says one big reason his company is still profitable today is that he and his brother stayed diversified through the boom and didn’t pour all their money into single-family residential construction.

“People would ask us during the boom why we didn’t just build new houses,” Hipple says. “But I like to keep my fingers in all of the [market segments].”

Hipple builds about six custom homes in any given year, houses ranging from $450,000 to a little over $1 million. The company also does remodeling, with the average job costing about $250,000, and will take on some light-construction projects at local attractions such as Busch Gardens and Colonial Williamsburg.

“We’ll usually do renovation of existing restrooms and shops, jobs like that,” says Hipple, who explains that he tries to mix and match his crews to the type of work they like to do.

“I’ve got guys who do just remodeling and others who just work on new homes,” he says. “We haven’t had any layoffs during the past year.”

Learn more about markets featured in this article: Austin, TX, Detroit, MI, Los Angeles, CA.