VOL. 125 | NO. 244 | Thursday, December 16, 2010
Monthly Building Dips, But 2010 Numbers Up
By Sarah Baker
While the holidays typically slow down the pace of building new homes, November’s permits took a bigger hit than usual as the industry continues to work through the recession.
Shelby County homebuilders filed 38 permits last month, a 34.5 percent decrease from 58 permits the same month a year ago, according to real estate information company Chandler Reports, www.chandlerreports.com.
November’s total also marked a 22 percent decrease from the 49 permits filed in October.
“This year is challenging,” said Tommy Byrnes, president of the Memphis Area Home Builders Association. “Unfortunately, we’re still seeing our market suffer.”
Shelby County homebuilders filed 38 permits last month, a 34.5 percent decrease from 58 permits the same month a year ago. November’s total also marked a 22 percent decrease from the 49 permits filed in October.
Year to date, however, the county has seen 645 permits, up 26.5 percent from 510 filed during the same period of 2009, the worst year on record since Chandler began tracking data in the mid-1980s.
The value of permits issued in November averaged $227,608, down from $248,185 in October and $309,516 in November 2009. The average square footage for new homes also dipped last month, with the November average of 2,995 square feet a significant decline from 3,407 in November 2009.
Builders are projecting the square footage of new homes to continue a downward trend. Even in the higher-end market, families are demanding smaller homes with more amenities.
“It is no secret that when we get out of this recession, the homebuilding business will be different,” said Byrnes, vice president of Byrnes/Ostner Investments. “We built houses in the heyday where each kid had their own walk-in closet and their own study area, but that’s just not going to happen anymore.”
Byrnes attributed the severe drop-off in home permits over the past few years to the lack of financing. Because homebuilders and homebuyers can’t get the loans they need to either build or buy, the market has shriveled.
“The hardest part of building a house right now because of the banking restrictions – it’s just so challenging for people to get a mortgage,” Brynes said.
Many builders are adjusting to the market by revisiting their business plan, such as taking on remodeling projects to compensate for the lack of new home requests.
“I know for a fact there are a lot of guys who are getting into the remodel/addition business that were previously building new homes because I’ve always been in that business and I’m starting to see more competition,” Brynes said.
November’s top homebuilder was Vintage Homes LLC with six permits averaging 2,427 square feet and $167,761. Vintage was followed closely by Regency Homebuilders LLC (five permits averaging 2,360 square feet and $135,274) and Leader 5 Star (five permits averaging 2,206 square feet and $152,185).
Regency principal Sean Carlson said the ongoing slump is due to the holidays, which always sparks a slowdown, and also the expiration of the federal homebuyers tax credit earlier this year.
“With the tax credit coming down the road, I think some builders were trying to get some houses out there,” Carlson said. “You’re seeing a slower migration towards first-time homebuyers moving a little bit more than what the move-up buyer is.”
The top ZIP code in November was West Person/Elvis Presley’s 38016 with nine permits averaging 2,213 square feet and $159,888. Arlington’s 38002 was a close second with eight permits averaging 3,525 square feet and $187,527.
The top subdivision for the month was a tie between Maple Grove PD in Arlington and Schilling Farms in Collierville, which both saw three permits. Maple Grove averaged $184,851, and Schilling Farms averaged $244,790.
Chandler Reports is a division of The Daily News Publishing Co. Inc.