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VOL. 127 | NO. 51 | Wednesday, March 14, 2012

Housing Market Slowly Improving

By Sarah Baker

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Memphis last month was named as one of 29 metropolitan areas to be included on the National Association of Home Builders/First American Improving Markets Index, which is now nearing 100 cities.

The index identifies metro areas that have shown improvement from their respective troughs in housing permits, employment and house prices for at least six consecutive months. Other notable new entrants to the list in February were Miami; Boston; Detroit; Kansas City, Mo.; Portland, Ore.; and Salt Lake City.

But to Jimmy Moore, 2012 president of the Memphis Area Homebuilders Association and builder with J. Moore & Associates, Memphis isn’t out of the woods yet.

“I guess I’m a little hesitant to get too excited too fast about that because it’s not happening very rapidly, but I think we are better off than some states and even some parts of Tennessee, not many,” Moore said.

MAHBA attended the state legislative agenda in Nashville last week, where many statewide homebuilder associations were present, meeting with different legislators about issues affecting housing.

“I heard from some (executive officers) of the different associations across the state and some are doing very well, like Chattanooga and Nashville,” Moore said. “Then some of the other cities across the state maybe aren’t doing that well. Compared to some of the places, Memphis may statistically be a little better, but anything is welcome.”

Memphis new home construction was basically unchanged year over year in February, but average size and value both saw impressive gains. Shelby County homebuilders filed 71 new home permits last month, averaging 3,553 square feet and $298,253, according to real estate information company Chandler Reports, www.chandlerreports.com.

In February 2011 builders filed 73 new home permits averaging 2,518 square feet and $188,794.

Moore said last month’s numbers are likely indicative of more people building a custom home, since that type of construction typically yields higher-than-market home averages.

“I have talked to some builders who have picked up pre-sales,” he said. “They’re not coming real fast, but evidently, they’re large enough and the number is increasing that would cause the average price to go up.”

Harry Todtman, principal/owner of Hallmark Builders Inc. and its in-house real estate firm Crown Realty Co., has a slightly different theory.

“Last year, there were a lot of beginner homes started, which were the much smaller homes,” Todtman said. “I think the market since last year for move-ups has gotten a little bit better.”

Regency Homebuilders LLC filed the most permits for the month, with eight averaging 2,893 square feet and $200,502. Other active builders were Forest Hill Properties Inc. (five; 4,080; $275,000), Hallmark (five; 3,251; $285,200), Karen Garner of Magnolia Homes (four; 4,967; $418,750), Grant Homes (four; 2,705; $181,084) and Klazmer/Skylar Homes (four; 3,002; $272,000).

Collierville’s 38017 ZIP code was the highest performing area by a considerable margin, with 22 new home permits averaging 3,332 square feet and $308,095. That ZIP also yielded February’s most active subdivision, Schilling Farms, with eight permits averaging 3,097 square feet and $279,250.

Hallmark’s concentration right now is in the Wolf River Ranch and Wynstone at Schilling Farms subdivisions.

“We had bought five lots (in Schilling Farms) and we just filed for four of our permits to get started on,” Todtman said.

Hallmark Builders has been in business since 1983. The company has recently modified its website, and depends mostly on local real estate agents for marketing its homes through the Multiple Listing Service.

“Most of our contacts are made either through people coming through our house, or by agents looking at specific criteria for their clients,” Todtman said. “We closed a couple in February. It seems like we run in spurts where we’ll have four or five sales at one time and then it’ll stop, and then a month or two later, we’ll have three or four more.”

Builders sold 28 new homes in February averaging $231,932 and totaling $6.5 million. That’s a 46 percent drop-off from the 52 that were sold in February 2011, averaging $206,229 and $10.7 million.

It’s also a 59.4 percent decrease from February 2010, when 69 new homes were sold, averaging $200,686 and totaling $13.8 million.

Moore is hopeful that spring on the horizon will spur homebuilding and buyer activity.

“Usually we have just almost a down year during election year,” Moore said. “But we’re hoping that since it has been slow, because the weather is getting better and it seems like there is a little more activity, that we’re looking for an improved year this year for sure.”

Chandler Reports is a division of The Daily News Publishing Co. Inc.

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RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 55 55 13,385
MORTGAGES 73 73 17,422
FORECLOSURE NOTICES 32 32 3,423
BUILDING PERMITS 623 623 31,553
BANKRUPTCIES 66 66 12,761
BUSINESS LICENSES 11 11 4,608
UTILITY CONNECTIONS 153 153 19,610
MARRIAGE LICENSES 44 44 4,104

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