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New home construction up big in May, still down for the year

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By Scotty McDaniel

A national report indicates there was a sharp increase in housing construction in May of this year compared to April, and numbers from Triple S Planning & Zoning suggest that Shelby County is following that trend.

The Commerce Department reported a 17 percent monthly increase for May on privately owned homes nationwide. The rate of 532,000 units was well above the 490,000 that were expected and significantly higher than April's record-low 454,000.

In Shelby County, Triple S  recorded a significant increase as well, with permits for new homes doubling between April and May, from nine to 18.

This includes single-family homes, patio homes, duplexes, condominiums and modular or trailer homes and apartments in Shelbyville, Simpsonville, and Shelby County.

"The first few months we had bad weather -- a slow market. In March it picked up because we had good weather," Triple S Executive Director Ryan Libke said.

Bill Hysinger, co-founder of Icon Properties LLC., said he has noticed business picking up. His company doesn't build single-family housing, but it does sell lots in Todds Station and The Cardinal Club in Simpsonville.

"It appears that in the last 30 days, there's been more phone calls and activity than there has been in the last four or five months," he said. "In Cardinal Club, we've probably sold three lots in about the last three weeks."

He said he's also working on three contracts with builders in Todds Station and one with an individual.

"We're starting to see some movement. The eight-thousand-dollar tax credit for first time homebuyers seems to be the moving force for the market, and builders I talk to seem to think now is a good time. Prices are reasonable to build.

"You can probably build a house right now for 10 percent less than a few years ago," he said.

Still a hill to climb

Like the entire country, Shelby County's home starts are still nowhere near where they were four years ago.

"It was a pretty good market back then. It's really changed," Hysinger said.

Records maintained by Triple S show that 49 house permits were issued in May of 2005, with 463 permits total for that year -- 237 in the county, 177 in Shelbyville, and 49 in Simpsonville.

That number fell to 129 housing projects in 2008, and now past the midway point of 2009, there have been only 51 permits, putting the year on track for another decline.

Libke said Triple S hasn't issued a single permit for a patio home or a duplex this year, and the economy is a big reason for reduced building. There are already a lot of empty houses locally, he said, so there's less interest in building more.

"I'd say development-wise, we've even seen a decline in new subdivisions being proposed over the last year," he said. "I'd just say the market is saturated.

"There's a lot of product for sale. If you drive to different subdivisions you'll see a lot of existing homes, previously owned or new, that are sitting there with 'for sale' signs in the front yard."

Hysinger said little will change in the housing market until citizens become more comfortable with their other finances.

"It all boils down to consumer confidence -- If they're comfortable with their job, keeping benefits. I think that'll take another three or four months before that settles down, and I think come fall residential markets will perk up a little bit," he said.

Judging by the numbers so far this year, Libke said it could take longer to see a turnaround.

"I'd say we'll end up a little below where we were lat year in permits based on what we're seeing right now," he said. "Unless in the second wave of the year something major happens."