A mixed bag of home building signals hope for 2013
It may still be too soon to declare an economic rebound, but recent construction data may point toward a housing sector comeback led by high-end, new home building in Jackson County.
Last year, 126 residential building permits were issued in Jackson County — up 20 percent from 2011. It still falls far short when compared to the pre-recession building boom, however. In 2007, 446 building permits were issued.
“It’s definitely still down from 2006 and 2007,” said Tony Elders, Jackson County land development administrator. “But I do believe that we have bottomed out, so to speak, and now we’re starting back up.”
Even the first month of 2013, typically a slow time of year for building projects, started out strong.
Jackson County was one of the few western counties, along with Buncombe and Henderson, to see an increase in residential building permits and also one of the few counties to see such a large uptick. Building permits were down compared to the previous year in both Haywood and Macon counties.
What may be even more telling is the type of homes getting building permits in Jackson County last year. According to the data, more than a quarter of those receiving permits were high-end homes. Moreover, the average permit fee collected per home was higher in 2012, an indicator that the homes being approved are larger and more expensive.
Several houses, valued at more than $1 million, were permitted in the Cashiers area last fall. Elders added that there are several subdivision-scale projects in the making as well.
In 2007, about 230 subdivision projects were underway in the county — ranging in size between 10 and 10,000 lots. About 150 of those projects were foreclosed upon, put on hold or abandon when the bubble burst, but now, about half are seeing activity, either with lots being sold or homes being building.
Elders said that may be a good sign. Entering the recession high-end homes were the first to trail off, and now could be an early harbinger of a turnaround.
“To me, it’s a telling factor that people who have money seem to be comfortable turning it loose,” Elders said. “They seem to have a keener eye on the economy.”
In addition to residential construction, the county also issued four more commercial permits than it did the prior year, an increase of 22 percent. Permits for renovations or remodeling were also up. Elders said it has made for a busier time at the permitting office.
“Our phones are ringing constantly,” Elders said. “And 18 months ago that wasn’t the case.”
But the story in Jackson County isn’t the same story unfolding for its neighbors. In Macon County, building permits were down by 10 percent in 2012 compared to 2011. The dollar value of the homes being permitted were also lower.
Reggie Holland, owner of Holland Construction in Franklin and the president of the Macon County Homebuilders Association, said commercial building and home renovations are keeping him afloat now.
“In 2010, the wheels came off the wagon,” Holland said. “And, right now, it appears we’re bouncing around the bottom.”
Last year, in Macon County, the total dollar value of all new homes seeking permits was $22 million — compared to $140 million in 2006. That’s an 84 percent decline in the new residential construction market. Holland said he had to cutback on hired help, and work is harder to come by.
Although the situation may seem dismal, Holland said it is logical that most people aren’t building new homes. The large inventory of existing homes on the market being sold at bargain prices is putting new home construction at a disadvantage.
Furthermore, because of the still-dropping home values, it is possible to build a new home and by the time it’s finished, have its appraised value be less than the raw cost of construction. That makes finding financing for a new home difficult, Holland said.
However, as the inventory of existing homes is sold off and prices go up, Holland expects the residential construction market to return.
“Once inventory gets down to where it’s picked over and used up, it’s going to make prices go up, which will make it easier to build a new home,” Holland said.
A 10 percent nationwide increase in housing prices last year was a positive sign, Holland said.
Like Macon, Haywood County saw building permits stagnate last year, but by a slighter 3 percent.
“Everyone is still kind of scraping by,” said Mark Bondurant, president of the Haywood County Homebuilders Association and president of Rare Earth Builders. “I’ll hear about a house here and there, but most guys are still waiting for things to cut lose, and they haven’t yet.”
Bondurant already has one job for a new home lined up in the spring — which is one more than he’s had for that time of year in a while.
Prior to 2009, Bondurant ran two crews and jumped from one project to the next, building several new homes a year. The one new home he has lined up this spring is a positive sign, but not enough to declare an economic rebound.
Up until 2010, Haywood County was neck and neck with Jackson County for the number of residential building permits. But in 2012, Haywood County had about 70 percent of the home construction Jackson had.
Haywood County doesn’t have the same concentration of high-end second homes as Jackson. Haywood saw a paltry five building permits for luxury homes compared to 34 in Jackson County.
Instead, mid-sized houses between 1,200 square feet and 2,800 square feet, built for local residents rather then seasonal visitors, have dominated the market in Haywood, according to Bruce Crawford, director of inspections for Haywood County.
“Jackson County has always tended to have higher-end homes,” Crawford said. “I have heard that particular type of high-end construction is coming back quicker.”
Haywood County saw more permits for remodeling and renovations compared to Jackson County.
While Bondurant specialized in energy efficient homes that sell from between $250,000 and $500,000, most of his work has been remodeling jobs recently, especially in Buncombe County. But he hopes when the market does come back, prospective homeowners will have a greater interest in his niche of the environmentally friendly houses, which Bondurant said will resale better than the competition.
“My sense is that the green homes are going to hold their value a lot better,” Bondurant said. “And the trend is that every home will be greener.”
Residential building permits in 2012 vs 2011
Buncombe: 613, up 19.5 percent
Haywood: 92, down 3.4 percent
Henderson: 238, up 16.1 percent
Jackson: 126, up 15.2 percent
Macon: 69, down 10.4 percent
Madison: 42, down 10.6 percent
McDowell: 84, down 13.4 percent
Polk: 46, up 15 percent
Rutherford: 102, up 25.9 percent
Transylvania: 73, up 17.7 percent
SOURCE: THE MARKET EDGE