By Sarah Baker
Local homebuilders filed 26 percent more permits in 2012 than 2011, the culmination of a dramatic change in the market that began last May.
Leo Lake, left, and Jesse Morgan install insulation inside a new home in Brunswick Farms. Grant & Co. are builders and Realtors for the project.
(Photo: Lance Murphey )
Shelby County saw 884 permits filed in 2012, up from 700 in 2011, according to real estate information company Chandler Reports,www.chandlerreports.com. Overall, sales of new houses in 2012 were basically unchanged with 774 new home sales recorded for the year compared to 781 recorded in 2011.
Keith Grant of Grant Homessaid May is usually a good month, but the activity carried through the fall until the traditional slowdown in November and December. It’s the effect of the existing home market beginning to take off again and the new home market adjusting accordingly.
“We had more than normal pre-sales coming in this past year in the fall, which is usually an indication that inventories are at low levels,” Grant said, adding that October was his company’s strongest sales month in its history. “If there’s a low inventory of used homes and you are having good sales in the used home market, it will translate over to the new home market as people start to migrate back into new homes, which they’ve been doing.”
Permits in 2012 averaged 3,227 square feet and $240,909, compared to 3,343 square feet and $229,039 in 2011. Average sales prices for the year for new homes were up 15.2 percent to $255,134, compared to $221,516 during the year prior.
Sean Carlson, partner with Regency Homebuilders LLC, said prices are having to uptick due to rising material costs.
“We raised our prices four times last year and we’ll raise them again probably at the end of January/first of February this year,” Carlson said. “Material, whether it be lumber or anything else, is going up, and obviously we’re having to make adjustments for that.”
Regency Homebuilders held the title as Shelby County’s top builder with 207 new home starts (2,906; $211,111) and 159 new home sales averaging $222,340 and totaling $35.4 million. Next came Grant Homes with 97 permits (2,840; $178,929) and 95 new home sales averaging $211,099 and totaling $20.1 million.
Carlson said the market “bottomed out awhile back” as the industry readjusted and permits started to rise. He touted that Regency has slightly more than 100 pre-sold houses already for this year that are either under construction or under contract.
“We’re going to start out the year very well,” he said. “I don’t think we’re going to jump by leaps and bounds, but I think a gradual uptick is good and we see that continuing.”
The ZIP code with the most permits filed was Arlington’s 38002 with 205 averaging 3,462 square feet and $227,725. Tallying the next highest amount per area was Collierville’s 38017 (175; 3,535; $319,243).
Active subdivisions for pulled permits included Wolf River Ranch in 38017 (48; 3,842; $369,558); Kensington in 38002 (42; 2,980; $185,575); Fountain Brook in Cordova-North’s 38016 (42; 2,819; $193,598); and Gerland Creek in Southeast Shelby County’s 38125 (41; 2,704; $185,722).
Grant’s outlook for 2013 is right in line with what many homebuilders and real estate professionals have been preaching for years.
“I think next year is going to be a slightly better year than 2012, just as 2012 was better than 2011 and 2011 was better than 2010. When we look back on it, the worst years are going to be 2008 and 2009,” Grant said. “I think now is still a really good time to buy houses, prices are going up as sales are going up. Why not buy a new home now rather than three or four years from now, when you’re looking back wishing that you had seen the appreciation in your home?”