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VOL. 123 | NO. 41 | Thursday, February 28, 2008

Builders Optimistic Despite Numbers

By Eric Smith

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The homebuilding industry has taken so many public relations hits in the form of failing companies and sagging sales that Shelby County's latest round of figures doesn't seem too terrible by comparison.

Sure, residential sales by builders in the county dropped by 13.6 percent from the same month last year, totaling just 95 for the month - down from the 110 homes sold by builders in January 2007 - according to the latest data from real estate information company Chandler Reports, www.chandlerreports.com.

But considering the widespread woes that plagued builders, coupled with even softer sales in the real estate market as a whole, the first month of 2008 turned out better than many feared, said Doug Collins, president of the Memphis Area Home Builders Association (MAHBA) as well as owner of real estate company Prudential Collins-Maury Inc. and building company Sovereign Homes LLC.

"Those are pretty good numbers - I
wish I were one of them," he said with a laugh.

Goes around comes around

"Pretty good" might be the most builders can ask for as they begin the year. Plenty of businesses still are reeling from a flurry of bad news that occurred seemingly every day in the latter half of 2007.

For example, Matthews Brothers Homebuilders - once the county's largest builder - as well as some of its related companies was hit with numerous lawsuits, liens and foreclosures. The company's Cordova office eventually sold at foreclosure in November.

And building permits took a collective nosedive almost every quarter last year as most companies scaled back their operations and shed as much overhead as possible to stay afloat.

So January could have been much worse, despite failing to match the same month from the previous year and even failing to match December 2007, which notched 100 homes sold by county builders.

As for total sales dollars, January registered $22.6 million, with an average sale amount of $237,840. That fell short of the January 2007 totals of $27.7 million in sales and $252,190 in average sales amount.

For December, total sales were $22.4 million and the average sales amount was $223,523.

Golden Compass

The top individual builder for this January in terms of total dollars was Compass Pointe Properties LLC, which notched 10 sales totaling $1.8 million.

Following Compass Pointe for the month were Rivertown LLC with four sales totaling $1.4 million; FaxonGillis Homes with six sales totaling $1.2 million; John Worley Jr. Builder Inc. with two sales totaling $958,800; and Phillip Baum with two sales totaling $870,000.

"We're excited about the way the year has started from two perspectives," said MAHBA executive director Don Glays. "There are a lot more people looking (to buy houses) right now than there were throughout November and December; and builders are reducing inventory. And that's important."

Continuing to reduce inventory will indeed be mission critical for an industry that hopefully learned its lesson from the overbuilding practices of 2006 and the impending slump that followed.

"The sting of 2007 is still fresh," Collins said. "I don't think as a group we'll be near as aggressive chasing the market as we were in 2006 before this happened in 2007. We were trying to build a house for everyone who wanted one, and in the process got ourselves exposed with large inventories. The next time it comes around, not everyone who wants one will get one."

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PROPERTY SALES 119 482 10,051
MORTGAGES 119 497 11,811
BUILDING PERMITS 268 1,056 21,366
BANKRUPTCIES 50 263 6,700

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