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Area housing starts finish strong

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Area housing starts have bounced back in 2010 from their 2009 plummet.

Home Builders Association of Greater Springfield CEO Matt Morrow said housing starts in the six-county area are on pace to rise nearly 20 percent, pointing to 1,102 permits filed through the end of November, up from 1,033 at year-end in 2009.

“We started a gradual recovery in 2010, although to most people it may not feel like that yet,” Morrow said. “By any measure, the bottom was in 2009.”

The local HBA commissioned Brentwood, Tenn.-based MarketGraphics Research Inc. to study housing trends in Taney, Stone, Barry, Webster, Christian and Greene counties. The report said permits peaked in the decade in 2005 at 5,235.

Morrow said it might be several years before construction returns to normal levels, which is around 2,800 to 3,200 starts in the six-county area.

“The (2005) high was too high; it was inflated,” Morrow said. “It was too high for the market to support, but we’ve worked through most of that inventory. We are at a point now where we do need some new homes.”

The national curve
If southwest Missouri hit its housing bottom in 2009, it may be ahead of the national curve.

Nationally, construction spending is up slightly for the second month in a row, but it’s down significantly compared to previous years. According to the Department of Commerce, construction spending this year is estimated to reach $802 billion based on October data, which is up from $797 billion estimated in September, but down from $848.7 billion in 2009. During the first 10 months of 2010, total construction spending amounted to $684.7 billion, 11.2 percent below the $770.6 billion for the same period in 2009.

Kevin Clingan of Kevin Clingan Home and Design is an anomaly of the area statistics.

The home builder recorded a banner 2009 with $1.8 million in revenues but didn’t start a single new home this year. He expects to finish 2010 with less than $100,000 in revenues, in part because of the calendar-year overlap of building projects.

“I did get two calls just this week for potential new homes, which is good,” Clingan said.
“It’s going to be a slow, gradual improvement.”

The treacherous 2010 forced him to turn to remodeling jobs and fixer-up investment properties for income.

“Right now, you have to scratch and claw to do whatever you can to get by,” he said.
“We’re doing some things right now that we didn’t ever really plan on doing. I think a lot of us are in the same boat.”

Housing’s place in the economy
Elliot Eisenberg, a senior economist with the National Association of Home Builders, visited Springfield on Nov. 30 to meet with local home builders. He talked about the relationship between new construction and the economy.

“Home building is a really important driver of a local economy,” Eisenberg said in a phone interview. “When you build a house, not only do you have the construction effect of people borrowing the money and spending the money to build, but then the people who are paid to build also spend money locally, and the people who move into the house move in and spend money. There are tremendous amounts of economic stimulus that come from home building.”

Before new construction can positively impact a region’s economy, however, there needs to be a good base of jobs to generate the need for new homes.

“It’s all about jobs, jobs, jobs,” Eisenberg said. “The faster we can create jobs, the faster we can get back on track.”

Nationally, unemployment in the construction sector has hovered around 17 percent this year, according to Associated Builders and Contractors Inc.

“We are looking at a situation where there were about 13,000 construction jobs that were there a few years ago that are just gone now,” Morrow said of the local impact.

Eisenberg was commissioned by the Springfield HBA to study home construction’s impact on the area’s economy. He’ll be back in May to present the report.

As for 2011, Eisenberg said national expectations for home starts are on the rise.

“Things are looking up. It’s not like its going to be a phenomenal year, but things are looking up,” he said. “Starts will be higher in 2011 than they were this year.”

Morrow said the custom-home market, which he considers a leading indicator, is trending up.

“It may be quite a bit better next year. You know, I don’t think anybody knows,” Clingan said. “Sooner or later, it’s going to have to turn around, though.”[[In-content Ad]]

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