Local homebuilders filed 20 percent more new home permits during the first quarter compared with the same period last year, but industry experts say the market won’t see significant recovery until next year.
Local homebuilding activity is picking up as there were 20 percent more new home permits filed during the first quarter compared to the same period last year.
(Daily News File Photo: Lance Murphey)
Shelby County homebuilders filed 195 permits during the first quarter (January to March), compared with 162 filed during Q1 2011, according to real estate information company Chandler Reports, www.chandlerreports.com.
Permits averaged 3,274 square feet and $251,348.
“It’s not exactly where we were hoping we would be, but it’s certainly better than we have been,” said Don Glays, executive director of the Memphis Area Home Builders Association. “It is a sign that the market is turning around. We are seeing more enthusiasm amongst builders and more confidence among consumers. When I talk to builders who operate model homes, they’re seeing a lot more traffic on weekends.”
And that uptick in activity seems to be having a positive effect on MAHBA’s membership totals. The organization boasts 520 members today, compared to 1,028 in May 2008. But it’s quite an improvement from December, when MAHBA had only 480 members.
To keep that momentum going, MAHBA is planning a membership drive May 8 through May 10, offering business and advertising incentives for new members and prizes for recruiters.
MAHBA has also begun hosting events such as Business Builders – designed to help associates and builders pitch their goods and services in a quasi-social environment – as well as networking events like Third Thursdays and Professional Women in Building events to promote professionalism among members.
Regency Homebuilders LLC filed the most permits last quarter, with 45 averaging 2,811 square feet and $204,967. The next busiest builder was Grant Homes, with 21 permits averaging 2,863 square feet and $181,610.
Keith Grant of Grant Homes said his company’s sales are up about 15 percent year over year between Shelby and DeSoto counties. Grant said Shelby has a much lower lot inventory and new home inventory today than in previous years, which has kept prices stable and even increased price points in some areas.
“The market is seeing more permits being pulled,” Grant said. “With that, the overall new home supply will go down and we see demand increasing. All that does is make for a stronger market in this area.”
The subdivision with the most activity during Q1 was Rolling Meadow in Collierville’s 38017 ZIP code, with 11 permits averaging 2,822 square feet and $260,545.
The highest performing ZIP code was Arlington’s 38002, with 48 permits averaging 3,284 square feet and $217,157.
“We’re doing well in the Bartlett, Lakeland and Arlington area right now,” Grant said. “All of our neighborhoods are selling well.”
Builders sold 132 homes last quarter, averaging $245,070 and totaling $32 million in sales volume. That’s a 37 percent drop from the first quarter of 2011, when they sold 169 homes averaging $229,073 and totaling $38.7 million.
And it’s a 42.6 percent drop-off from the first quarter of 2010, when 230 sales averaged $211,879 and totaled $48.7 million.
Glays said the reason for the decline is due to current inventory levels compared to last year.
“The numbers … I think are skewed simply because builders were forced to unload those houses,” Glays said. “They’re not being forced to do that now. No builder is building to the same volumes as they had in the past.”
Even in hard times, however, MAHBA recognizes the need to give back. The group is hard at work planning its Builder Blitz during the first week of June, where five new houses will be donated to Habitat for Humanity of Greater Memphis.
So far, all appliances, framing lumber, locks and door hardware, wiring and electrical boxes have been donated.
“By the time we’re ready to bang the first nail, we’re hoping to have most of the material donated,” Glays said. “We’re just looking for labor at this point.”
Chandler Reports is a division of The Daily News Publishing Co. Inc.