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VOL. 118 | NO. 185 | Wednesday, October 13, 2004

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Third quarter building permits

Construction Increases in Third Quarter

Residential market continues surge, commercial looks up

LANCE ALLAN

The Daily News

Mid to late summer 2004 was a good time to be employed in construction in Memphis activity in the market was at a high.

Building permits increased in the third quarter over the same period in the last two years, boosted by an active September, when 1,223 permits were filed, according to The Daily News Public Records Database, www.memphisdailynews.com.

The total number of permits filed in the third quarter was 3,250, up from 3,098 in third quarter 2003 and 2,862 in third quarter 2002.

The number includes residential and commercial properties, as well as remodels and additions. The data represents permits filed with the Memphis and Shelby County Office of Construction Code Enforcement, which oversees construction in Memphis, unincorporated Shelby County, Lakeland, Arlington and Germantown.

Commercial pickup. The increase in permit filings is due in large part to the continued strength of the new home market. However, area builders are beginning to see a pickup in commercial construction activity.

What we see from the commercial side, and specifically with our company, is we think things are starting to pick up here hitting this fourth quarter, said Kevin Moyes, vice president of Flintco Inc. Our market in Memphis has been slow, but we see it picking up.

Moyes said the economy has affected the building market.

Part of it is the cost of construction, as the steel industry has had significant cost increases starting in January this year, he said. I know there are several projects that have come out to bid and just arent economically feasible.

Catching up. Because the industry tends to lag behind economic shifts, builders have been feeling the effects of past economic troubles, he added.

The economy has actually been picking up this year, Moyes said. The construction industry with jobs taking six months to a year-plus to complete really the slowdown that has occurred is feeling the effects of where the economy was a year and a half ago.

Were the last one to slow down and really the last one to pick up, as well. A year and a half ago, everybody was saying the economy was bad, and we had more work than we could do.

Residential surge continues. The new home market has been strong for several quarters.

I think builders are remaining confident, said Mark Billingsley, executive director of the Memphis Area Home Builders Association. Most builders I talk to are absolutely covered up with new housing starts. Some of them are having a hard time keeping up.

David Miller, owner of Perennial Building Group, said its a good time to be building in Shelby County. His companys permits are up 32 percent this year over 2003.

We usually build in the 150 to 160 range, and well be in the 210 to 215 range, Miller said. Were up a lot, and every builder I talk to says the same thing.

And low mortgage interest rates are continuing to drive the home building market. The prolonged period of low rates has opened the market to more buyers.

People who couldnt qualify 10 years ago, youre finding (lenders are) a lot more lenient, said David Minten, chief operating officer of Horizon Homes.

Minten said the low rates are enabling more buyers to qualify for loans. However, he cautioned, that trend cant go on forever.

Downtown boom. Builders continue to add homes in the still-growing areas of Cordova, Collierville and Southeast Shelby County. But its the Downtown market that many builders are increasingly looking toward for new projects.

Weve seen a huge, huge increase in the amount of projects were bidding Downtown, said Lee Patton, owner of Patton & Taylor Enterprises. Downtown is becoming so hot. Thats my opinion, right or wrong. Everybody and their dog is trying to get Downtown.

Much of the work is rehab work, including several condominium and townhouse projects in the $200,000-plus range, Patton said.

But while a good deal of high-end construction is taking place, several projects under way are directed at lower-income residents.

Were doing some stuff for Henry Turley and Belz using Hope VI money, Patton said. So youve got the upper end theres a heavy demand for that. And middle- to lower-income there is a lot of building going on to fill that need, too.

Continued increase. The number of building permits filed increased each month during the third quarter, and the trend might not be short-lived. Miller predicted a continued increase in the next couple of months.

We pull a bunch of permits normally in October and November because if it takes 90 days to build a house, that puts you right into the January/February market, he said. The first quarter, we sell as many houses as any other quarter. What people are doing now is theyre starting houses so they can be ready.

Builders expect the market to remain strong in the fourth quarter and moving into 2005.

I still see it as being very upbeat, Patton said. Were pricing things going into next year. Our book is full right now, and thats going into next year, too. I think thats pretty much the consensus for all builders.

 

RECORD TOTALS DAY WEEK YEAR
PROPERTY SALES 64 151 1,493
MORTGAGES 45 105 1,152
FORECLOSURE NOTICES 5 19 209
BUILDING PERMITS 201 410 3,466
BANKRUPTCIES 35 119 872
BUSINESS LICENSES 9 32 361
UTILITY CONNECTIONS 0 0 0
MARRIAGE LICENSES 0 0 0