Shelby Home Permits Stagnate, Sales Decrease

By Sarah Baker

New home permits were flat in February compared to the same month last year. 

Shelby County homebuilders filed 70 permits in February averaging 3,142 square feet and $222,975, according to real estate information company Chandler Reports, That compared to 72 permits filed in February 2012, averaging 3,520 square feet and $294,109.

While relatively flat on permits filed, builders sold 39 new homes in February averaging $284,664 and totaling $11.1 million. That compares to February 2012’s 43 sales that averaged $225,966 and totaled $9.7 million.

Charles Morgan of Vintage Homes joked that the permits-to-sales ratio was “going in the wrong direction.” While most of the builders in town are building speculative or showcase homes, 95 percent of Vintage Homes’ sales in 2012 were presales.

“If (the speculative builders) don’t sell, they quit building them,” Morgan said. “It’s an indication that homes they’ve started that weren’t sold haven’t sold as well as maybe the builders have anticipated they would.”

Last month’s builder sales total marks a steeper decline from February 2011’s 53 sales that averaged $203,281 and totaled $10.8 million. But Don Glays, executive director of the Memphis Area Home Builders Association, said “2011 was a different year.”

“Builders were still trying to work their way out of a lot of inventory,” Glays said. “Going from 43 (in 2012) to 39 (in 2013) is not a dramatic drop.”

Glays said the association is still optimistic that its members will perform between 12 and 15 percent more collectively year over year by the end of 2013. Albeit he added that a lot of that is going to depend on what happens with the new banking regulations from the Dodd-Frank bill and how that plays out when banks are dealing with customers.

“We still don’t have rules on qualified mortgages, down payments, all of that kind of stuff,” he said. “I still believe that there’s some fence-sitting going on.”

Regency Homebuilders LLC filed the most permits in February, with 15 averaging 3,254 square feet and $240,484. Grant Homes was also active last month, with 11 permits averaging 2,988 square feet and $196,891.

Arlington’s 38002 ZIP code saw the most homebuilding activity, with 25 permits averaging 3,545 square feet and $238,156. It was followed by Collierville’s 38017, with 13 permits averaging 3,239 square feet and $279,769.

Subdivisions with homebuilding movement included Brunswick Farms in 38002 (5 permits; averaging 3,471 square feet and $260,222), and Schilling Farms in 38017 (5; 3,052; $275,000).

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