In just five years, the booming residential construction industry has disintegrated in Springfield’s bedroom communities.
From 2005 to 2007, Marshfield, Nixa, Ozark, Willard, Rogersville, Republic and Battlefield reported more than 3,000 housing starts combined. Last year, there were less than 200 homes started in those seven communities collectively, according to building permits filed in each city.
The impact is clear.
“We’ve lost our largest employer,” said Brian Bingle, city administrator in Nixa, Christian County’s star development player in recent years. “It’s like a (manufacturing plant) closing down.”
Nixa is perhaps the poster child for this small-town housing bust. Housing starts there dropped to 43 last year from 498 in 2005.
The sharp declines from city to city left many builders out in the cold, with housing inventories from 2007 starts having nowhere to go in 2008 and early 2009.
“I was selling houses for less than I built them for, and regrouping, trying to figure out what to do to keep myself in business,” said Kenny Bussell of Bussell Building Inc., who’s worked in the Nixa and Republic markets.
“When the economy took a turn for the worse, I was stuck with seven big houses in the $350,000-plus (price range).”
And Bussell considers himself one of the lucky ones: He’s still building. “Now, $129,900 is my magic number,” he said, noting that he’s sold nearly 20 homes in two months this year, compared to 56 sold all of last year.
Builders say low supplies have had a direct effect on pricing and strategies.
Greg Huntsman, a principal at PGH Investments LLC, shifted his business model to develop homes in three price ranges.
PGH’s Nixa subdivisions include The Columns, Phase I, which started in 2006 and is well-suited for homes exceeding $250,000; The Columns, Phase II was started in 2006 and is targeted for homes up to $200,000; and Highland Ridge, started in fall 2009, is targeting homes in the low $100,000s, Huntsman said.
“As a developer, the biggest challenge is the availability of capital. Lower-priced homes are selling faster,” Huntsman said, attributing the demand to first-time homebuyers and federal tax credits.
Huntsman also is taking advantage of some changes Nixa has made to spur development.
“Nixa really took a proactive stance when the economy began to turn down. They held meetings with builders and developers and made some changes in the codes that were helpful,” he said, adding that he’s planning more lots at Highland Ridge.
Among the changes the city made was reducing street width requirements and decreasing minimum lot size requirements to 6,000 square feet from 7,000 square feet.
“If you’re looking at an additional unit per acre, that’s 10 to 20 additional homes or lots in a 10- or 20-acre subdivision that the developer can sell to help recover the costs of the infrastructure development,” administrator Bingle said.
However, developers haven’t yet fully utilized the changes, Bingle said.
“We still have 700 lots ready for construction to begin immediately,” he said. When companies are ready to start building again, Bussell said he would advise them to move slowly.
“It’s a completely different ballgame, from lending all the way up. … It’s not only tough on buyers, it’s just as tough on builders and even tougher for a developer,” said Bussell, who plans to build 100 homes in 2010.
Huntsman said financing is one of the reasons he isn’t seeing a lot of planned developments.
“The financial markets are still in such a state of disarray, developers are really kind of in the back seat right now,” he said.
Rick Ramsey, owner of Ramsey Building Co., said even the higher-end homebuyers are having trouble obtaining financing. The homes Ramsey builds start around $400,000, he said, with homes in Nixa, Fair Grove, Christian and Greene counties and the Shell Knob area.
Even though he has clients with good credit, some are struggling to come up with the 20 percent down now required by lenders.
“It takes a buyer that has good credit and money to put down,” he said. “Those types of people have themselves in a great situation because the cost of materials and labor is at an all-time low.”
Ramsey estimates that the cost to build a new home today is 12 percent to 15 percent less than in 2006.
It appears more builders are starting to return to the housing market. New housing starts in January and February already are looking as if they’ll outpace 2009. Ozark has almost reached its 2009 total of 16, having issued 14 permits in January and February. Nixa’s 22 housing starts in the first two months of the year are more than half of all starts in 2009, but Bingle isn’t predicting an end to the slump yet.
“The numbers appear to be improving. I would have to guess as to why,” Bingle said. “I wish they’d given me a crystal ball when I started this job. I can only hope there has been an absorption of existing homes.”[[In-content Ad]]A Fresh Start Year-to-date 2010 housing starts are providing hope for smaller communities.