Chattanooga area home building is off to its strongest year in a decade

Chattanooga area home building is off to its strongest year in a decade

Residential housing starts in Hamilton County jump 27 percent in first half of 2016

August 6th, 2016 by Dave Flessner in Business Around the Region

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Hamilton County home starts

In the first six months of 2016, the number of new single-family homes started in Hamilton County was the highest since 2007

Year — No. of home starts

› 2006 — 1,106

› 2007 — 911

› 2008 — 484

› 2009 — 391

› 2010 — 452

› 2011 — 374

› 2012 — 495

› 2013 — 498

› 2014 — 451

› 2015 — 522

› 2016 — 665

Source: The Market Edge, single family residential building permits issued January through June each year in Hamilton County

Home starts in Hamilton County jumped 27 percent in the first half of 2016 as homebuilders capitalized on lower interest rates and higher employment to launch their busiest building year since before the Great Recession hit in 2007.

According to building permits filed by homebuilders and compiled by the real estate data service known as The Market Edge, 665 new homes were started in Hamilton County during the first six months of the year, or 143 more than in the same period a year ago and nearly 300 more home starts than in the trough of the recent housing slump five years ago.

"We are seeing strong double-digit growth in residential building starts in all of the markets in this region where there is strong job growth like Chattanooga, Nashville, Louisville, Evansville, Asheville and Charlotte," said Dale Akins, president of The Market Edge in Knoxville. "Also, home starts tend to be higher in presidential election years, and this year is no exception."

In the past year, employers in metropolitan Chattanooga have added a net 7,478 jobs, increasing employment by nearly 3.1 percent, according to the preliminary June jobs report by the U.S. Bureau of Labor Statistics.

"Home starts follow jobs," Akins said.

With mortgage rates near historic lows and unemployment below 5 percent in most markets, homebuyers are more able and more willing to make what for most is the biggest purchase in their lives, he said. Low mortgage rates help keep financing rates down, while more jobs in an area boosts both income for existing workers and more opportunities to draw other workers to the region from other parts of the country.

Win Pratt, who heads Chattanooga's biggest home building business, said his company is midway through a record sales year in 2016.

"We'll probably be up 30 percent this year over last," said Pratt, president of Pratt Homes. "We're on pace to close about 160 houses this year, which would be a record high for us. It's a great market right now. It won't stay that way forever, but it's certainly strong now, and we expect that to continue into 2017."

Pratt said he has worked to expand the number of residential lots available for building in the area. That is getting harder and more costly as fewer vacant sites are still available in the county, he said.

In the first half of 2016, Chattanooga Realtors sold 10.6 percent more houses than in the same period a year earlier. But as sales have grown, the inventory of homes on the market has not kept pace.

At the end of June, the Greater Chattanooga Association of Realtors said the number of homes for sale, 3,703, was 912 fewer than a year ago, or 19.8 percent below the number on the market in June 2015.

"We're seeing a lot of people moving into Chattanooga, and with the inventory of homes fairly tight there is a strong demand for more homes," said Jay Bell, president of Bell Development Co., another major homebuilder.

Both Pratt and Bell are seeking to rezone property to develop more new residential subdivisions.

On Monday, Pratt will ask the Chattanooga/Hamilton County Regional Planning Commission to back his request to rezone 136 acres in the county on East Brainerd Road, south of Brentwood Cove Drive, now owned by the Murphy Family Trust, to allow for the construction of up to 248 homes.

The farmland is now zoned agricultural, but Pratt is asking that the land be changed to an R-1 residential zone to accommodate a planned development with one- and two-story dwellings.

The planning commission this spring previously endorsed plans by Pratt for another 150-home subdivision on Julian Road leading toward Council Fire in East Brainerd.

On Monday, Bell will ask planners to rezone 83 acres on Lovell Road near West Ridge Trail Road in Soddy-Daisy to allow for the building of up to 330 homes. The site is now undeveloped and zoned for agriculture. But Bell, who represents Tidewater Properties LLC, is seeking an R-1 residential zoning to allow for the building of one- and two-story homes on the property.

The request is to build up to 96 units on 83 acres, but the zoning could allow up to 330 dwellings, according to the planning commission staff who are recommending the zoning be approved.

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.


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