With Chattanooga housing inventory at decade low, builders add new homes
May 17th, 2017in Local Regional News
Nearly eight years after the end of the biggest downturn since the Depression, Chattanooga homebuilder Jay Bell said Tuesday he's finally seeing the start of "the great resurgence" in housing.
"It's the beginning of the housing market really coming back," he said, adding that the first three months of 2017 were his strongest for home sales and pricing in a decade.
Home starts in the five-county Chattanooga area grew 9 percent in the first quarter over the same period a year ago, climbing 25 percent in Hamilton County and soaring 60 percent in Catoosa County, Ga., according to a Knoxville company that tracks the industry.
"We continue to see an increase in housing activity, which reflects primarily the improved job market," said Dale Akins, president of The Market Edge. "Home starts parallel what is happening in the employment market, and with more jobs being created, we're seeing more home starts."
He said 546 new homes were started in the quarter in the Chattanooga area that also includes Bradley County in Tennessee and Walker and Whitfield counties in Georgia.
Also, in 2016, the Chattanooga area at last recouped all the jobs lost during the Great Recession, figures show. In addition, just Monday, state numbers indicate Hamilton County outpaced the rest of Tennessee in new business formations in the first quarter of this year.
Win Pratt, president of Pratt Home Builders, said consumer confidence is high, people are spending money, housing prices are appreciating and homebuilding is "finally climbing out of the recession."
"Businesses are creating jobs," he said. "People feel somewhat enthusiastic about the economy."
While interest rates are showing an uptick, that movement is pushing some people into the housing market, Pratt said.
"It gets people off the fence," he said.
Chattanooga developer Doug Stein said he's working on two new housing projects, and he's trying to make it three.
"We've got more demand than supply. We've been scrambling to get inventory on line," said Stein, who is overseeing new units going up at Black Creek Mountain. "We've had very few homes reach completion without being sold."
Bell agreed there's a shortage of new homes on the market. He's seeing more renters buying homes.
People who may have come out of the recession with blemishes on their credit have worked through those issues, he said.
Mike Croxall, president of the Home Builders Association of Greater Chattanooga, said credit has "loosened up some."
"People are looking at the long-term investment of purchasing," he said.
David DeVaney, president of NAI Charter Real Estate Corp., said he's seeing more visitors converting to permanent residents as Chattanooga becomes "a desirable town to live in."
"We're seeing people coming here, visiting, who love the quality of life and saying, 'Let's live here and figure out a way to make a living,'" he said.
However, while housing activity has ramped up, pressure is gaining on both finding labor and home construction costs, builders said.
Stein said labor is "the No. 1 challenge for everybody."
"It worries me, frankly," he said.
Pratt said material prices are increasing. That, coupled with a shortage of developable lots and regulatory requirements such as meeting stormwater laws, makes building new homes harder, especially to meet the needs of first-time buyers, he said.
"It's making the first-time home-buying category really difficult and hard to deliver the lower-price-range new home," Pratt said.
Croxall said his group is working with the city of Chattanooga to look at adjustments to current regulations to keep homes affordable and still provide clean water.
"We're getting close," he said.
At the same time, developers said they're feeling confident about the rest of 2017.
Bell said, for example, his company is building new roads in every neighborhood it's developing.
"I'm very excited about the new housing market," he said.
Business Editor Dave Flessner contributed to this story.
Contact Mike Pare at firstname.lastname@example.org or 423-757-6318.