Home builders expecting 'decent' year in 2010 as economy recovers
Monday, January 11, 2010
After Jackson saw a slight increase and Cape Girardeau a decrease in new home construction in 2009, area builders are hoping for a better 2010.
"I think we'll have a decent year," said developer Brandon Williams. "I just don't know if it will be like 2005 and 2006, when we were selling 30 houses each year that were $300,000-plus each for the most part."
In Jackson, 40 single-family home building permits were issued in 2009, two more than in 2008. In Cape Girardeau, 30 single-family home building permits were issued last year, 14 fewer than in 2008.
Last year Williams' company built and sold 25 newly constructed homes, about 5 percent down from 2008. He said before the market begins a dramatic turnaround, consumers must regain confidence in the economy once again.
"People are scared," Williams said. "I know people who want to buy houses but don't have money to put on it. We hear every week that people are really wanting to build and get into a new home but just don't have the cash."
But Williams said he's off to a good start in 2010, selling nine units through the first two weeks of January. His company recently purchased 32 acres near the Jacyees Golf Course in Cape Girardeau, where he expects eventually to build as many as 70 homes, though he said it likely will be 2011 when the first home is built in the subdivision.
Mike Jones, owner of Cape Custom Homes, said the economic downturn forced his company to increase its remodeling business the past two years rather than constructing new homes. Instead of building $400,000 homes as he did in the past, Jones said his company now will build homes priced much lower.
"People aren't buying the big homes like they used to," Jones said. "So we're matching our market demand."
Steve Taylor, president of First Missouri State Bank, said banks are still lending to customers planning to build a home but are more cautious.
"Used to we didn't worry about if someone had another house to sell while they bought or were building another one," Taylor said. "While we still loan out money to some in that situation, we're making sure people like that don't have two houses they can't afford. We're wanting to make sure people can afford both mortgages."
Nationally, construction of new homes has shown recent signs of life.
A report by the U.S. Commerce Department revealed that in November new-home construction increased by 8.9 percent, rising to 574,000 compared to the previous month. The lowest month in 2009 was April, with 479,000 units built.
Joe Robson, chairman of the National Association of Home Builders, expressed optimism with the latest figures, even though he admitted the slow economy could keep many potential buyers from building a new home for now.
"The fact that both starts and permits for new housing production rose last month is a good sign that we're headed in the right direction, albeit slowly, on the road to a housing recovery," Robson said.
David Crowe, an economist with the National Association of Home Builders, said he expects to see the effect of the expanded home buyers credit to take a few months. The $6,500 credit applies to those who have owned a house five of the past eight years.
"The fact that permits increased in November is a hopeful indication that the desired impact of the tax credit on housing demand may be forthcoming early in 2010," Crowe said. "In the meantime, credit for new housing production remains extremely difficult to come by, posing significant obstacles to builders with viable projects."
Bill Cole, a broker with Realty Executives of Cape County, said buyers should take advantage of purchasing or building a new home while the incentives are still there. He said the tax credit has already contributed to an increase in homes sold, from $144,500 in 2008 to $150,000 in 2009. He estimates that nearly half of first-time homebuyers did so through building a new home last year.
"We've said this has been one of the best buying opportunities in years," Cole said. "We really weren't kidding."