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VOL. 128 | NO. 138 | Wednesday, July 17, 2013

‘Transition Period’

Shelby County homebuilding stagnates in second quarter

By Amos Maki

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The number of permits pulled by homebuilders in the second quarter was flat with the same period last year. Shelby County homebuilders filed 269 permits during the second quarter of 2013, the exact same number they filed in the second quarter last year, according to real estate information company Chandler Reports, www.chandlerreports.com.

Samuel Ibarra works on a home at Woodlands of Cordova by Regency Homebuilders. Building activity remained unchanged in the second quarter compared to the same period last year.  

(Daily News File/Lance Murphey)

Don Caylor of Summerset Homes Inc. said the market has improved since the darkest days of the recession passed, but a host of issues – including regulatory roadblocks, rising material costs, a shrinking number of lots, increased labor costs and stricter lending practices – continue to present challenges for local builders.

“We think we’re behind in the number of houses we need to be building, but we’re climbing our way back to where we need to be,” said Caylor, president of the Memphis Area Home Builders Association. “We’re having to find ourselves again and figure out where the market is.

“We literally woke up one morning and people had turned the lights off on business. Things are a lot different today.”

Year to date, Shelby County homebuilders have filed 474 permits, a slight increase from 469 permits filed for the same period in 2012.

MAHBA executive director Don Glays said builders were “cautiously optimistic” about a market turnaround.

“It’s a transition period,” said Glays. “They’re much more optimistic than they were a year ago and much, much more optimistic than they were in 2007 and 2008. We didn’t have anything optimistic to talk about in 2007 and 2008.”

While the number of permits was flat when compared to last year, the average permit measurement and price increased. The average permit in the second quarter measured 3,360 square feet and $279,967, increases from 3,140 square feet and $235,097 in the second quarter of 2012.

Caylor attributed the size and value upticks to rising costs for materials and supplies, labor and transportation.

“That is not profit going to the builders, I can assure you of that,” Caylor said. “That is all costs.”

Caylor and Glays said costs could continue to rise as the number of available lots, especially cheaply priced lots acquired from banks that had foreclosed on a property, continued to dwindle.

“Banks have been unloading those lots and doing it at bargain bottom prices and that is stopping,” Glays said.

The top builder, as tracked by home permits from April through June, was Regency Homebuilders LLC (65 permits that averaged 2,982 and $223,077). Next up was Charles Morgan of Vintage Homes (23; 2,680; $180,852) and Karen Garner of Magnolia Homes (19; 4,094; $356,473).

The ZIP codes notching the most permits in the quarter were Collierville’s 38017 (63: 3,575; $241,858) and Arlington’s 38002 (52; 3,647; $241,858).

Active subdivisions during the quarter were Wolf River Ranch in Collierville’s 38017 (24; 4,043; $370,021), Kensington in Arlington’s 38002 (14; 2,950; $188,963) and Wesley Forest in Westwood’s 38109 (14; 1,391; no price listed).

Builders sold 228 new homes during the second quarter, averaging $261,642 and totaling $59.6 million. Regency Homes led the way in sales, with 53 averaging $227,425 and totaling $12 million, followed by Grant Homes with 25 sales averaging $232,446 and totaling $5.8 million.

There were 209 new homes sold in the second quarter of 2012, averaging $300,948 and totaling $62.8 million.

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

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PROPERTY SALES 105 105 9,674
MORTGAGES 82 82 11,396
BUILDING PERMITS 134 134 20,444
BANKRUPTCIES 58 58 6,495

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