Single-family building permits slide as builders look to 2016

Residential construction has been in virtual free fall for the last decade. Small, yearly increases only stymie the overall decline.

In 2005, Greene County tallied 2,234 single-family building permits. That number fell by 74 percent to just 580 in 2014. The story is the same across the metropolitan statistical area. To the south in Christian County, housing starts fell by 70 percent over the last decade and to the east, Webster County dropped by 87 percent to just 67 new permits.

“2015 sucked, and you can quote me on that,” said Doug Pitts, owner of Doug Pitts Construction LLC.

According to Springfield Business Journal list research, Pitts’ crew built more houses in 2015 than the previous year, but the owner says it was a rough go every step of the way.

“Doing higher end, custom work, I don’t do a lot of houses in a year,” he said. “So, when things take long to get started, it slows down my whole year. It was a rough year for everybody.”

The roller coaster ride continues inside Springfield city limits. Post-recession numbers are building, but dips in the track prevent real progress. While residential permits for new builds are up 28 percent in 2015, they still are down a few percent compared to two years ago.

Following a relative breakout year in 2013, with 151 Springfield permits and 637 across Greene County, SBJ identified residential building as one of four areas to watch in 2014. Building on Ron Stenger Cos.’ announcement to develop a three-phase, 82-acre subdivision just east of U.S. Highway 65 on Division Street, local industry officials felt a potential return to boom times was near.

On the heels of an 18 percent increase in 2013 across Barry, Christian, Greene, Stone, Taney and Webster counties, Home Builders Association of Greater Springfield officials projected another 18 percent increase in residential building permits for 2014. As the year played out, permits fell by 26 percent in the Queen City and nearly 1 percent countywide.

Optimism must be in the water for 2016.

“2015 finished fairly strong. Single-family residential permits issued were up in Ozark, Republic, Greene County and Christian County,” said HBA CEO Charlyce Ruth. “The Home Show has always been a good indicator for the general feeling in the construction industry. If this remains true, then 2016 is shaping up to be a strong year. The 2016 Home Show is on track to have the largest number of booths since 2011.”

According to the monthly National Association of Home Builders/First American Improving Markets Index which measures single-family building permits, home prices and employment to compare the current levels to their last normal, sustainable levels – Springfield is flat at 0.8 since June 2014.

An index value above 1 indicates the market has advanced beyond the previous sustainable level of economic activity, according to the NAHB.

An index value above the national index level – currently at 0.93 – indicates the market is doing better than the country as a whole, moving beyond the most recent period of normal economic growth.

Springfield consistently scored a 1-plus index prior to 2005, but the number has fallen ever since. While the city’s index score isn’t moving fast, it now is moving up, from a low of 0.73 in 2012.

Builders on the ground are feeling the potential surge, too.

“It’s feeling like it’s going to be a really good year,” Pitts said. “The market is coming back enough there no longer is a surplus at the higher end. That means work for me.”

Fellow high-end homebuilder Rick Ramsey said while there may not be an increase in 2016, he doesn’t see a decrease ahead.

“Most anyone that does quality work at all will be very busy,” said Ramsey, owner of Ramsey Building Co. “Good people will work. That wasn’t the case four years ago. Even if you were good, there just wasn’t the work to go around.”

Building 13 homes last year with an estimated market value of $15.6 million, Ramsey said he has quite a bit on his plate for 2016. The area of concern is the smaller home market.

“That’s really a development issue because there have been no subdivision startups to really speak of,” he said.

“Builders are stuck with more challenging lots in existing subdivisions – lots that may have a huge slope or something less desirable.”

With space limited inside the city, Ramsey considers Rogersville as the next residential housing boom market.

In November, homebuilder Bussell Building Inc. closed on the purchase of 98 available lots in Patriot Place, the residential portion of the largely vacant Jamestown development in Rogersville. The sales price was $1.18 million, according to Greene County officials, and Team 24-7 Realtors of Murney Associates, Realtors brokered the deal.

Bussell plans the first of roughly 20 speculative homes – at about 1,500-1,800 square feet apiece – to be complete this summer. Homes are expected to sell between $140,000 and $180,000 each.

“There is still available land in Rogersville; that means opportunity for everyone,” Ramsey said.