Building permits show strength of local market

|tab|

|ret||ret||tab|

|ret||ret||tab|

New home construction and remodeling continue to be strong in the Springfield area, as evidenced by building permits filed with the Springfield Building Development Services Department and Greene County Building Regulations.|ret||ret||tab|

|ret||ret||tab|

New homes|ret||ret||tab|

As of the end of September, year-to-date new home starts for Springfield and Greene County totaled 1,284, with an estimated construction cost of $204.8 million, according to city and county records.|ret||ret||tab|

The majority of permits filed 984 were for new homes in Greene County with an estimated construction cost of $157.5 million. At this same time last year, only 826 new-home permits had been filed with a value of $133.2 million. That translates to a 19 percent increase in new home starts, and an 18 percent increase in total construction cost. |ret||ret||tab|

Weather permitting, 2003 is likely to exceed 2002's total of 993 new home starts with an estimated cost of $160.4 million.|ret||ret||tab|

In the city of Springfield, 300 new-home permits have been filed year to date, with a total estimated cost of $47.3 million. That's an increase of almost 11 percent in number of permits up from 271 in 2002 and 19 percent in construction costs up from $39.6 million in 2002.|ret||ret||tab|

|ret||ret||tab|

Driving the trend|ret||ret||tab|

According to Matt Morrow, executive officer of the Home Builders Association of Greater Springfield, the major factor driving new home starts is simply demand.|ret||ret||tab|

"Interest rates have been relatively low for quite a while, and certainly that has driven part of the uptick in home building in the last two to three years, but in addition to that, this is an area where we continue to grow ... as far as people moving here from other areas," Morrow said. |ret||ret||tab|

He added, "The biggest factor on whether or not homes are being built is are you growing in population, is it an attractive place to live, is cost of living relatively low and good jobs available, and all of those are very positive here."|ret||ret||tab|

The impact of low interest rates is more about who's buying, he said, noting the loose, inverse relationship between interest rates and the stock market. "When interest rates are low like they have been for the last couple of years, not surprisingly the stock market has been a so-so investment opportunity for people. What happens is people 1) want to invest in their homes because it's a more stable investment and 2) the people who are investing in their homes are generally people who use borrowed money as opposed to accumulated wealth and dividends that come from owning stock. That's a long way of saying that interest rates have more to do with who is buying homes than whether or not homes are being built." |ret||ret||tab|

|ret||ret||tab|

Remodeling|ret||ret||tab|

As of the end of September, permits filed in Springfield and Greene County for residential repairs and remodels in 2003 totaled 311 with a total construction cost of $5.2 million. At this time last year, there were slightly fewer permits issued 295 with a construction cost of $5.3 million.|ret||ret||tab|

Not surprisingly, there were more repairs and remodels in the city, where the housing stock is generally older. City repair and remodel permits totaled 291 with a construction cost of $4.6 million. County repair and remodel permits came in at 20 with a construction cost of $618,836.|ret||ret||tab|

According to Morrow, the strength of the remodeling market right now is a bit of an anomaly.|ret||ret||tab|

"It's kind of an interesting dynamic that's going on right now, because usually there's sort of another inverse relationship between new construction and remodeling. Generally when people are not building new homes, they're looking at their own homes to remodel, and vice versa. Right now, both are really strong."|ret||ret||tab|

It's an unusual situation, he said, "and a lot of our remodelers, I've heard them say, I wonder what will happen in our industry if and when the time comes that new construction cools off a little bit,' because usually that's when remodeling really takes off and most of them are kind of overwhelmed right now with all they have to do."|ret||ret||tab|

Effects for builders|ret||ret||tab|

A market with high demand for both new construction and remodeling means equally high demand for labor. "(Labor) is tight," Morrow said. "That's one of the biggest challenges in the industry locally."|ret||ret||tab|

Because of that shortage, Morrow said, its a good idea, "if you're building a new home or remodeling your existing home, that you're working with a professional contractor who has subcontractors who are loyal to him or her, because it can be really hard to get subcontractors if they're not already a part of the team."|ret||ret||tab|

Another effect is on the cost of materials, and therefore the bottom line. A recent price spike for plywood and oriented strand board (OSB) when prices more than doubled has been blamed on hurricane damage or overseas shipments to rebuild Iraq. However, " if you talk to the lumberyards, they'll tell you that's really less the issue than the fact that we had such a strong summer, not only here but everywhere, and the building never really stopped," Morrow said. |ret||ret||tab|

"It was a relatively dry summer, so there really weren't those weather periods for the market to catch up to demand."|ret||ret||tab|

However, Morrow added, the National Association of Home Builders now reports that prices have stabilized.|ret||ret||tab|

[[In-content Ad]]