New residential construction is generally thought to be an indicator of future economic conditions. Post-recession, housing starts have trended upward locally and nationally, with builders generally constructing more new homes each year than the year before.
This year, housing starts across the country are up by 5.5 percent through April compared to the same period in 2014, according to data from the U.S. Census Bureau and U.S. Department of Housing and Urban Development.
Locally, housing starts aren’t keeping pace, which could indicate a slowing of the economy. However, three local experts say demand for new homes is just starting to heat up.
According to residential construction tracker MarketGraphics Research Group Inc., which monitors residential building permits in Greene, Christian and Webster counties, home construction is down 7 percent in the first four months of 2015 based on residential building permits. In the three counties, there were 325 permits issued January through April, a drop from 350 in 2014.
In 2014, housing starts in Greene, Christian and Webster counties were flat with 1,062 collectively, compared to 1,059 in those counties in 2013. That’s up from 2012, when there were 833 residential building permits issued.
Jason Bekebrede, owner of Monticello Custom Homes & Remodeling and a board member with the Home Builders Association of Greater Springfield, said while new home construction is relatively flat around Springfield, it’s picking up in nearby rural areas. According to MarketGraphics, housing starts in Greene County were down 9 percent in 2014 to 580 from 637 in 2013, while Christian and Webster counties both realized increases.
“In the city limits of Springfield, there are very few lots available. Into Greene County, there’s not a lot of affordable property, and that starts to push people out a bit further,” he said. “One of the couples I’m doing a house for, they wanted 80 acres. They bought way out in Dade County because they could afford 80 acres there and being close to town wasn’t that important to them.”
Bekebrede said he is busier now than he was last year, estimating company revenue to be up over 10 percent compared to 2014.
“Last year, at least for me, people were slower to pull the trigger. This year, it seemed like they were ready to get going right out of the gate,” he said.
Greg Huntsman, a principal with Springfield-based development and investment group PGH Investments, said he’s observed building activity in the area improving even if the first four months of 2015 reflect a decline.
Huntsman is expecting to close on the sale of 10 lots to multiple buyers in Nixa’s The Columns subdivision by June 15. The sales reflect a steady improvement in demand for building at the subdivision since Huntsman found himself stuck with 140 lots in 2010 that he couldn’t sell. These days, he has just 32 still available.
Adjacent to The Columns, PGH Investments owns over 40 acres, where Huntsman plans to sell 40 lots in an initial development phase for a subdivision dubbed Old Castle Estates. The subdivision should have around 200 homes at total build-out, he said.
“We’re going to continue through the subdivision one plat at a time until we sell them all off,” he said. “We just got our first phase platted for 40 lots, and we already have interest from buyers in those.”
Huntsman had turned his investment focus in 2010 to oil and gas and decided not to make any new moves in real estate until he sold off most of his inventory. Only in recent months has he revisited the acreage at the back end of The Columns.
“We just bided our time and waited for the market to come back. It’s taken us a long time to sell through the inventory, but we’re getting it done,” he said.
The local residential-building market might be slow-going in the first four months of the year, but Greater Springfield Board of Realtors Executive Jessica Hickok doesn’t expect it to stay that way. GSBOR tracks “months of inventory” in the area, which represents how long it would take for the total inventory of homes for sale to run out if no new homes were built. In May, that figure was at 4.1 months, which is the lowest it’s been in over two years.
As a general rule of thumb, Hickok has said if months of inventory run under six months, it’s a good time for builders because demand for homes is high.
“The summer season is one of the busiest, and we still have three months to go on that. So any ground that needs to be made up will likely happen in the next few months,” she said via email.
According to GSBOR data, average sale prices January through May went up across Greene, Christian and Webster counties compared to the same period in 2014. In Greene County, the average sale price rose 7.7 percent to $149,114; in Christian County, the increase was 10.7 percent; and in Webster County, the jump was 12.1 percent.
Springfield home prices rose 4.3 percent in April compared to the same month last year, reports real estate market tracker CoreLogic, which also factored in local distressed sales. Excluding distressed sales – which comprise short sales and real estate owned transactions – Queen City prices were up 2.5 percent from a year earlier, according to a news release. Compared to March, Springfield home prices – including distressed sales - moved down less than 1 percent in April.
Though the area has seen slow improvements in housing starts post-recession, the market is much different than it was when new construction was at all-time highs 10 years ago.
“Back when the market fell, we were predominantly doing (speculative) homes,” Bekebrede said, referring to building without a buyer lined out. “Now, all we do is custom projects.”
Across the three counties, area builders constructed around 2,200 homes in 2005, more than double the number built last year.
