The National Association of Homebuilders said Tuesday, Dec. 18, that sentiment across the homebuilding industry rose to its highest level since the middle of 2006.
National housing permits in November posted a 26.8 percent increase from November 2011. And while they’re not up quite that much, local starts are seeing increases as well.
Shelby County homebuilders filed 68 permits in November, a 10 percent boost from the 62 filed during the same month last year, according to real estate information company Chandler Reports, www.chandlerreports.com. November permits posted an 18 percent decrease from the 83 permits filed during October.
November permits averaged 3,223 square feet and $260,603. That compares to November 2011 averages of 3,136 square feet and $235,999.
And prices are expected to keep trending upward, said Don Caylor, 2013 president of the Memphis Area Home Builders Association.
“Pretty much the forecast is that we’re going to continue to see increased cost in housing, which is going to drive prices,” Caylor said. “The other toss at that is the supply of lots – we’re running out of lots, especially the good-priced lots, which is also going to drive that cost. Then you offset that with what is the cost to develop today.”
The desire to live in Germantown and Collierville has already driven the prices up in those areas, said Don Glays, the association’s executive director. The trick for builders is to try to find the right lot at the right price to build the right product to where consumers can qualify.
“We’re going to continue to see increased cost in housing, which is going to drive prices.”
Memphis Area Home Builders Association
“I can’t tell you how many times people have told me that they had a solid contract with somebody who was employed and had been employed for a long time, was guaranteed a good job going forward, had a good down payment and offered X number of dollars for the house,” Glays said. “Then the appraisal came in something less and the bank wouldn’t loan them mortgage money.”
Regency Homebuilders LLC continues to lead the county in new home construction, filing 19 permits in November averaging 2,698 square feet and $188,412.
Other busy builders were Grant Homes (10; 2,848; $179,332), Karen Garner of Magnolia Homes (five; 3,622; $360,000), Charles Morgan of Vintage Homes LLC (four; 2,467; $170,946), Palmer Albertine of Albertine Co. LLC (three; 5,408; $535,000) and Richard Grant (three; 2,792; $184,633).
Cordova North’s 38016 ZIP code tallied the most permits last month (20; 2,727; $185,801). The next most active ZIP was Arlington’s 38002 (16 permits; 3,223; $235,372).
The local subdivisions with the most activity during November were Fountain Brook (nine; 2,843; $189,417) and Oaklawn Estates (six; 2,766; $191,713), both located in 38016.
Meanwhile, permits are keeping pace with sales. Builders sold 68 homes in November, averaging $304,182 and totaling $20.7 million in sales volume.
That’s a 5.6 percent decline from November 2011, when they sold 72 homes averaging $218,161 and totaling $15.7 million. But it’s a 6.3 percent uptick from November 2010, when 64 sales averaged $245,628 and totaled $15.7 million.
Glays said economists predict a bit of the market’s pent-up demand to be released in 2013, but that the big influx is going to come in 2014.
“If a house has a 100-year lifespan and there are 300,000 houses in Memphis, you’d think that we’d have to build 3,000 houses a year just to keep up with deterioration in the market,” Glays said. “We’ve been building 600, 700, 800, 900, maybe 1,000 houses a year, so we’re falling behind, so there is a pent-up demand.”
Chandler Reports is a division of The Daily News Publishing Co. Inc.