Tri-Cities new home construction increasing, but lags last year's pace
Oct 22, 2009 at 12:00 AM
The number of new residential building permits issued in the Tri-Cities region during the third quarter is a high-water mark for 2009. But although construction across the region is increasing it's down 44.6 percent from last year.Larry Kerns, president of the Greater Kingsport Builders Association, said there's just enough business to keep area builders' and contractors' heads above water ... and "there are some contractors who are doing nothing."According to data from The Market Edge, the number of new residential building permits in Sullivan, and Washington counties in Tennessee and Scott Co. Va. posted slight gains during the third quarter. It was enough to balance declines in number of new permits in Carter, Greene and Hawkins counties and Washington Co., Va. Overall, new residential building permits in the NE Tennessee region increased by one permit over the second quarter total. TCI Group President Jerry Petzold said the increase in residential permits "is a positive sign and reflects that homeowners - not builders - are moving forward with construction plans to take advantage of today's competitive construction cost and bank interest rates.""Builders still cannot obtain spec loans. Seven banks were surveyed in recent weeks to find no availability of speculative house bank loans or new development loans. None were in the market to make this type of loan today due to tight bank regulations. Perhaps these positive signs of increased building permits will give more banks the courage and confidence in our local market to fund new builder spec loans and put construction people back to work and provide a minimal supply of new homes construction for the spring 2010 selling season," he added"At The Islands at Old Island, we are building two new custom homes for clients and providing our own capital assets to build speculative houses until banks turn their lights back on and want our business again. Only builders can restart the trend of building homes locally, but they cannot do that without the funding being made available by local banks."Kerns said his organization is working with local and state political leaders to loosen up housing money on the local and state levels, but he thinks it will be sometime next year before substantial gains in new construction are made. An area of special interest to the builders, and others in the real estate industry, is the extension and possible expansion of the $8,000 credit for first-time home owners. That program expires at the end of November and there's intense lobbying for it being extended for a year and possibly expanded to all home purchases.The National Association of Realtors says data show that the first-time buyer credit has had its intended impact to help the economy recover from recession. "Sales have jumped in recent months, but it is a fragile recovery and now is the time to build on momentum by extending the tax credit through 2010 and expanding it to all home buyers."Earlier this week The Wall Street Journal noted the McGraw-Hill construction forecast pointed to modest gains next year for the nation's construction industry with a rise in building of single-family houses, apartment buildings, and highways and bridges offsetting drops in commercial and manufacturing property.The McGraw-Hill forecast is one of the indicators signaling that the economy will remain choppy in the wake of the longest and steepest recession since the Great Depression. New development will continue to be dragged down by high unemployment and tight credit markets.BusinessWeek's take on the report was that the value of U.S. construction starts in 2010 is expected to climb 11 percent next year."The U.S. construction market in 2010 will be helped by growth for several sectors, following three straight years of decline that brought total construction activity down 39 percent from its mid-decade peak," said Robert A. Murray, vice president of economic affairs for McGraw-Hill Construction.The report also forecast the dollar value of single family housing next year will advance 32 percent.The Tri-Cities third quarter residential building report numbers looked encouraging when compared to the September national data. Applications for home building permits on the national level fell in September by the largest amount in five months.The decline, in part, reflected uncertainty about whether Congress will extend a tax credit for first-time homebuyers. During September, six permits were issued for new single-family homes in Kingsport. The housing market in the Tri-Cities region has fared better than many other parts of the nation during the recession, but it's struggling to gain a recovery foothold. Observers expect that struggle will continue for the next six months or so. Here's what the third quarter new permits looked like for NE Tennessee.Carter Co. - 23 permits, down 2 permits from the second quarter, down 33.6 percent from the same year-to-date volume last year.Greene Co. - 26 permits, down 11 permits from the second quarter and down 40.6 percent from the same year-to-date volume last year.Hawkins Co. - 4 permits, down 1 permit from the second quarter, down 62.9 percent from the same year-to-date volume last year.Sullivan Co. - 70 permits, up 1 permit from the second quarter, down 42 percent from the same year-to-date volume last year.Washington Co. Tenn. - 99 permits, up 20 permits from the second quarter, down 48 percent from the same year-to-date volume last year.Scott Co. Va. - 10 permits, up 2 permits from the second quarter, down 17.2 percent from the same year-to-date volume last year.Washington Co. Va. - 28 permits - down 8 permits from the third quarter, down 52.1 percent from the same year-to-date volume last year.