Area home starts rise to highest level since 2008

Area home starts rise to highest level since 2008

May 8th, 2012 by Ellis Smith in News

Josh Hill, a journeyman electrician with J&S Electric, installs an electrical panel while working on one of the homes being built in the Stonebrook neighborhood Monday morning.

Photo by Dan Henry /Times Free Press.

First-quarter home starts in Hamilton County

2012 - 237

2011 - 175

2010 - 224

2009 - 174

2008 - 241

2007 - 460

2006 - 578

Source: The Market Edge

There's a new sound in the Tennessee Valley.

It's an echo that hearkens back to a time before Bear Stearns was a household name, back when people did their banking at a place named Wachovia and "flipping houses" was an actual profession.

It's the sound of men at work on new homes, and it hasn't been this loud in more than four years.

Jay Bell loves the crash of hammers and the distinctive ringing of circular saws. The cacophony is a signal that the market finally is mounting its long-awaited comeback, the Chattanooga-based builder said.

"Buyers have regained their confidence," Bell said. "The inventory that was built up several years ago has been sold off in the suburbs, and we're back down to normal levels."

And things are only going to improve, said his father, Julian Bell.

"All of our studies and everything else tells us that the market is going to continue to get better," said the elder Bell.

The increase in new home starts backs up the Bells' optimistic take.

The number of Chattanooga-area building permits rose to 104 in March for the six-county region, the highest level since 2008, according to the Business and Economic Research Center at Middle Tennessee State University. For the first quarter this year, the 237 home starts in Hamilton County, too, are at their highest point since the first quarter of 2008, according to The Market Edge research firm.

Hamilton County leads the region in growth, even beating Knox County -- which had a still-strong 218 home starts for the quarter. Before 2011, Knox County in some years saw twice as many home starts as Hamilton County.

Realtors as well, known for their persistent optimism even through the depths of the recession, have become more cheerful than usual in the past few months.

"We're not hearing the negative stuff about housing going down and prices drastically going down anymore," said agent Kaye Ivey, who works for Bell Development. "People are beginning to feel that there is a light at the end of the tunnel."

What's not evident in the growing number of home starts is the shrinking size of the average home. Buyers these days want less square footage, low maintenance and a price tag below $300,000, builders say.

Empty-nester Randy Campbell is part of the new less-is-more school of thought. Campbell is downsizing from a four-bedroom, 21/2- bath Signal Mountain home to a 2,000-square-foot condo in East Brainerd's Stonebrook community, a new home that will cost him about $256,000, he said.

"That whole community, what they're building is going from the low $250s up," Campbell said. "It's not like going to a crackerbox. We're still able to downsize to a good-sized unit."

Campbell's style of home, with its smaller single-level design and upscale touches, is flying off the shelves.

Bell Development and its chief local competitor, Pratt Homebuilders, each built nearly 30 homes over the first quarter this year. James Pratt calls it "one of the best quarters we've ever had from a sales standpoint."

But he doesn't believe that the heady days of late 2006 will make a return anytime soon. In fact, he hopes that doesn't happen.

"Quite frankly, I don't think we want to be there right now," Pratt said. "Back then we were putting too much inventory on the ground, and there were too many homes being started for what the demand was. What we've got right now is more in line with what it ought to be."

Demand has risen thanks to persistently low interest rates, a vibrant local jobs market and looser restrictions on bank loans -- all trends that should continue at least through the year, he said.

Home sales are moving so fast, the Chattanooga market could run out of lots by 2013, forcing developers to clear more land, Pratt said. The glut of bank-owned lots from the credit crisis largely has been sold off, and the best lots -- called Class A -- are dwindling, he said.

"I think you'll have to see some development if this demand for housing stays somewhat constant," he said.

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