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New home construction permits, sales increase since last year

Wednesday, June 6, 2012 | 2:29 p.m. CDT; updated 7:03 p.m. CDT, Wednesday, June 6, 2012
Antonio Sanchez, a framing supervisor, left, looks at a blueprint Tuesday afternoon, while Victor Estrada, a framer, works on a new house in Thornbrook Subdivision. Both men work for Tompkins Construction.

COLUMBIA — After working attentively for about two months, contractor Jon McCullem finished building his company's first house in northeast Columbia this April.

McCullem, the owner of JMC Construction, got his company's permit to build single-family homes late this February. According to recent data from the Columbia Community Development Department and Boone County Resource Management, his permit represents one of an increasing number that have been issued in Columbia and Boone County this year.

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From January to April, the city of Columbia has issued 108 new single-family construction permits, up from 102 for the same period last year. That is about a 6 percent increase for Columbia permits this year. In Boone County, there were 45 single-family construction permits issued from January to April, compared with 36 from January to April 2011. That is a 25 percent increase for Boone County permits this year.

Pat Zenner, development services manager of the Columbia Community Development Department, said this increase shows an improvement in the new home construction industry and could be a sign of a recovering economy.

McCullem said the data show that consumer confidence has improved.

“Buying a new house will cost more money," McCullem said. "It shows more trust in their ability to pay back the money and more trust for the overall economy.”

Jeff Hemme, owner of Hemme Construction, has been in the industry for about 10 years. He said this year so far has been great for his company and the entire new home construction industry.

“I haven’t seen a better time than now since probably 2005,” Hemme said. “It’s selling very well. We don’t have much inventory right now.”

Home sales for new houses and houses under construction in Boone County through April increased from 65 last year to 78 this year, according to the Columbia Board of Realtors.

Kim Coleman, president of the Columbia Board of Realtors, said low unemployment rates are one reason for the increase.

“Generally speaking, if you can get a job here, you will probably feel more comfortable buying houses or moving into larger ones,” she said.

McCullem said the low unemployment rate is also good for property value, which is one thing to consider when consumers buy houses.

“Fewer people will default their loans, and you’ll see a lower rate for foreclosures,” he said.

According to U.S. Bureau of Labor Statistics, the unemployment rate for Columbia has been below 6 percent for the first four months this year. April's unemployment rate was 4.5 percent.

Another important factor has been what Zenner calls a historically low interest rate.

"It's a great time for builders," he said.

Zenner said he started to see the stabilization of the financial market in the past six to 10 months.

“Money is flowing again,” he said.

The low interest rate not only helps construction workers and builders — it also helps consumers.

“I see a great demand. It’s a good time for people to buy houses because the rate is low,” said Aaron Orr, a subcontractor with Creative Building and Design.

Low mortgage loan rates have encouraged some people to buy houses — especially those who could have bought houses in the past few years but didn't because they were "staring at the economy," Coleman said.

While some were "staring at the economy," others made their moves. Many people took advantage of some federal programs to purchase new homes in 2010 and 2011, Zenner said.

“Tax credit programs, for example, had stimulated home ownership and purchasing,” Zenner said. He said he thinks people buying up the inventory of existing houses encouraged more new home construction.

The growth through April compared with last year also resulted from some factors other than the improved economy.

Hemme said some local consumers might have been waiting for the school redistricting in Columbia. Earlier this year, the Columbia School Board voted to designate new intermediate and high school boundaries, taking into account Battle High School, which will open in 2013.

“They probably didn’t make up their minds to buy a house until the final decision for redistricting the public schools was released,” Hemme said.

The weather might have also influenced the increase in home construction and sales, McCullem said.

“It’s been so warm since February. It’s crazy. The spring selling this year has been pushed forward, I think,” McCullem said.

While builders and contractors are excited about the growth this year, some said the improvement in new home construction started earlier.

Don Stamper of the Home Builders Association said he has seen a “turning-around indicator” in the housing market since 2010.

Stamper said that the prices for single-family homes have gone up through April of this year.

“It’s still competitive, nothing cheaper than before,” Stamper said.

Materials such as copper or anything oil-based have been more expensive, and wood prices have gone down, Stamper said. But the overall price for construction materials has gone up.

Although new home construction and sales as well as consumer confidence have increased, builders still have their concerns.

“It’s harder for the entire industry to borrow money from the banks. They (banks) are more cautious now,” Hemme said. 

McCullem said the economy is coming out of the recession, though it's a slow process.

“It’s never as fast as people want. It takes time for everyone to recover,” McCullem said.

Supervising editor is Ann Elise Taylor.


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