Tri-Cities new residential permits up 17.2%; builders don’t expect return to pre-recession level


  • Washington Co. leads region in total new permits
  • Sullivan Co. leads in new single-family detached homes

New home construction bounced back last year after a 2014 slump. New residential permits across the Tri-Cities region were up 17.2%, but there’s not much hope from local builders that the industry will be anywhere near pre-recession levels in the near term.

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Data from The Market Edge’s Q4 and year-end report show a year-to-year gain in all but two of the region’s seven counties. The largest percentage gains were scored in some of the smaller counties, but the bulk of the activity (82%) comes in the region’s two largest counties.

And there’s an oddity in the permitting process that distorts construction of traditional detached single-family homes and town homes.

The Market Edge report shows year-to-year new residential permits increased 35.7% in Washington County and 5.9% in Sullivan County. However, about a third of the Washington County permits were for townhomes in planned unit developments while Sullivan County’s permits are almost exclusively single-family detached homes. So, when you adjust and look at the number of detached home more were built in Sullivan last year than in Washington County despite the fact that new resident growth was higher in Washington County.

By most accounts that’s not a big distinction, but the competition between the two counties over new household formations, population, and sales tax and just about everything else is an issue. That competition is keen because a lack of new home inventory is one of the reasons Kingsport officials think drove many – most by some account – of an influx of new Eastman employees to locate in the Washington County area.

National Association of Homebuilders Chairman Ed Brady attributed February’s dip in the builders’ confidence index to the high cost and lack of availability of lots and labor but said that February’s index shows builders are still generally optimistic about the housing market.

That matches what local builders reported when asked to comment for this report. Construction costs are up and local builders say they’re having trouble finding the crews they would like to hire.

What are local builders hearing from their new customers and potential customers?

Michael Garland, developer and owner at Garland Farm Estates, said he has not seen a lot of interest from out-of-town prospects. Instead, most are from the area and a now read to invest in moving up. “The comfort level is up after a significant period when there wasn’t a lot of confidence in the economy.

Eric Kistner, Principal Broker at Bridgepoint Realty and Auction, said many of the customers he’s talking to are moving to Kingsport, want to buy a new home and are not finding enough inventory to choose from. In Edinburg just about everyone is moving here from somewhere else.

Kelly Wolf at Wolf Development said from his perspective the customers are more in charge than they have been at other times. “Folks are talking their time about making a decision,” but confidence has improved.

All three thought  the local new home market was settling into a new normal and didn’t see much chance that new home activity would be anywhere close to pre-recession levels under the current conditions.

Garland said there’s room for growth, but I don’t think we’ll see anything like 2006 or 2007. How’s his confidence level? “I’m confident enough in myself and my development to invest in the next phase of Garland Farms Estates.

Kistner said there’s definitely room for improvement in the Kingsport market, but that improvement faces headwinds that include lot availability, population growth and new household formations.

Wolf pointed out that the conditions that drove those 2006 and 2007 new construction levels don’t exist anymore.  “Sustained, steady, slower growth from a business perspective is not a bad thing.”

He added he’s fairly confident that slow growth trend we’ve seen over the past few years will continue. “There are enough good things happening in job and retail growth to keep consumer confidence up.”

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