VOL. 129 | NO. 74 | Wednesday, April 16, 2014
Winter Drags Down Q1 Building Permits
By Amos Maki
Shelby County’s homebuilding industry, plagued by poor weather early in 2014, got off to a slow start in the first quarter, with builders filing 14.2 percent fewer permits than in the same three-month period a year ago.
Shelby County builders are blaming poor winter weather for a 14.2 percent drop in building permits filed during the first quarter of the year.
(Daily News File/Lance Murphey)
Builders filed 187 permits in Shelby County in the first quarter, compared with 218 permits in first quarter 2013, according to real estate information company Chandler Reports, www.chandlerreports.com.
Homebuilders said the winter weather that lingered over the Memphis area during the first three months of the year made it difficult for crews to work outside and caused some potential buyers to stay indoors, leading to a drop in permit and sales activity in the first quarter.
“It’s all due to the weather,” said Charles Morgan of Vintage Homes LLC. “We’re about six weeks behind because of the weather. March is almost a total write-off. We want to have everything ready by March and certainly April, but it was a rough year this year, as far as getting exterior stuff done.”
Keith Grant of Grant Homes said traffic in neighborhoods was good when the weather was more favorable, leading him to attribute the cause of the slowdown to the wintry weather.
“Last year was abnormally warm and dry, and this year was abnormally cold and wet,” said Grant. “We’ve had a struggle getting everything out of the ground this year, and there were fewer people getting out in the neighborhoods. On the warmer weeks we had good traffic, so the weather has been a factor.”
The average size of first-quarter permits decreased 4.7 percent to 3,020 square feet, compared with 3,170 in 2013. However, the average price increased 3.1 percent to $240,673, compared with $233,416 in the year-ago period.
“In the long run, we’re still very affordable compared to what we will be when we run out of lots,” Morgan said.
The top homebuilder in the first quarter, as tracked by number of permits, was Regency Homebuilders LLC (53 permits, averaging 2,867 square feet and $211,939). Grant Homes tallied the second-highest number (25 permits, averaging 2,887 square feet and $212,377), and Kevin Hyneman came in third (23, averaging 1,967 square feet and $141,925).
The subdivisions notching the most permits in the first quarter were Kensington in Arlington/Lakeland’s 38002 ZIP code (13, averaging 2,900 square feet and $198,406) and Fountain Brook in Cordova North’s 38016 ZIP code (13, 2,609, $182,344). The Walker Farms subdivision in Arlington/Lakeland’s 38002 ZIP code had 12 permits.
Builders sold 157 homes during the first quarter, averaging $277,724 and totaling $43.6 million, down 21 percent from 178 sales in the first quarter of 2013.
The top builder for sales in the first quarter was Regency Homebuilders LLC, with 37 averaging $249,084. Grant Homes sold 14 homes averaging $229,872, and Karen Grant of Magnolia Homes sold 10 homes averaging $145,849.
Homebuilders entered 2014 with optimism after the industry showed signs in 2012 and 2013 that it had finally begun to recover from the housing bust and recession.
Homebuilders filed 870 permits in 2013, down 5.2 percent from 918 permits filed in 2012, but still far above the 698 permits filed in 2011. The average permit in 2013 measured 3,287 square feet and averaged $256,630, compared with 3,211 square feet and $245,627 in 2012.
Grant said the market is in a period of steady, manageable growth without the peaks and valleys that marked the housing boom and bust.
“We have seen stable growth the last few years, which is a good thing,” said Grant. “If we were growing too quickly, I’d be looking for the next cliff we would fall off into, but we’ve had stable growth.”
Morgan and Grant said they believe that despite the slow start, 2014 will be a good year for builders. Prices, while they have been on the upswing, remain affordable, interest rates are still attractive and consumer confidence is rising.
“I’m not seeing any slowdown in the coming year,” Grant said. “We’ve already had a strong April the last few weeks. I expect to have a stronger April this year than we did last year.”
Morgan expects activity to gain momentum as builders enter the traditional spring and early summer selling season.
“Traffic was really up so far in April and people are getting out again,” said Morgan. “I think the demand is there.”
Chandler Reports is a division of The Daily News Publishing Co. Inc.