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VOL. 126 | NO. 159 | Tuesday, August 16, 2011

New-Home Permits Improve 12 Percent

By Sarah Baker

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Local homebuilder permits saw a healthy bump last month, and industry experts said the rest of year looks promising as well.

Alberto Reyes works on a Vintage Home under construction at Whisper Ridge.
(Photo: Lance Murphey)

Shelby County homebuilders filed 61 permits in July, an 11.7 percent increase from 55 filed the same month a year ago and a 35.5 percent increase from 45 filed in June, according to the real estate information company Chandler Reports, www.chandlerreports.com.

Permits averaged 3,131 square feet and $273,824 in July, an uptick of 6 percent and 34.1 percent, respectively, from July 2010’s average permit, which spanned 2,952 square feet and $204,199.

Last year’s tax credit had a significant impact on the monthly permits in 2010, boosting permits earlier in the year last year, said Keith Grant, president of Grant & Co.

“Since the credit ran out in June (2010), the permits had to be pulled by April in order to finish the home by the end of June,” Grant said. “On the other hand, it also lowered the number of permits that were pulled in the second half of last year. This had some impact on the differences.”

Also, because inventories have remained low, the new-home market has somewhat stabilized, Grant said.

“We have not seen the ups and downs month over month this year that we did in the first half of last year,” he said. “I believe the third and fourth quarters will be better than last year. Our traffic has been much stronger in July and August compared to last year, leading to more sales.”

Regency Homes LLC filed the most permits by a landslide, with 17 averaging 3,089 square feet and $358,289.

Year to date, Regency has closed on 97 houses, said company principal Sean Carlson. Including current inventory sold, he expects to close on about 200 houses by year’s end.

“I would venture to say that I’ll pull the majority of our permits in the second half of the year,” he said. “We’ve been writing probably 20 to 25 contracts a month.”

The next highest number of permits was filed by Charles Morgan of Vintage Homes LLC, which filed nine permits averaging 2,656 square feet and $182,983, followed by Grant Homes, with six averaging 2,676 square feet and $171,404.

Grant Homes continues to sell about 10 houses a month in Shelby and DeSoto counties, Grant said.

“Prices have been very stable and even started going up in some of our neighborhoods,” he said.

The most active subdivision last month was Gerland Creek in Southeast Shelby County’s 38125 ZIP code, with seven permits averaging 2,568 square feet and $176,556.

The ZIP code with the highest amount of builder permits went to Arlington’s 38002, which saw 19 averaging 3,555 square feet and $367,585. Next was Southeast Shelby County’s 38125 with 13 permits averaging 2,782 square feet and $190,026.

Arlington is the one area of town where all three of the county’s largest builders – Regency, Vintage and Grant – have an active presence.

“None of us are really building in the same subdivisions or anything or even really all that close to each other, except for in Arlington,” Carlson said. “There’s not a lot of lots left in Arlington at all and there’s really not much for sale in terms of buying lots.”

Homebuilders sold 54 homes in Shelby County during July, averaging $213,378 and totaling $11.5 million in sales volume.

That’s down 10 percent from July 2010, when 60 new homes were sold averaging $244,721 and totaling $14.7 million.

June saw 80 sales, averaging $213,460 with a total volume of $17.1 million.

The supply of new homes is extremely low right now, Grant said, and he expects the trend to continue for those builders that are still out there.

“Builders must rely on construction loans from banks in order to build more new homes to offer for sale,” he said. “We have been fortunate considering banks are still lending to (us), but other builders have not been as fortunate and thus they are unable to build the number of homes they would like to. This will continue to keep new home inventories very low over the next several years.”

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

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