story by Kim Souza
ksouza@thecitywire.com
With half of 2013 in the books, home builders and lenders give the local residential construction market a solid “B” grade, citing modest improvements in demand at a pace that is keeping construction crews busy.
New residential building permits issued by the region’s four largest cities in June totaled $26.767 million, rising 8.73% from the same month in 2012.
Bentonville, Fayetteville, Springdale and Rogers issued 118 permits for new single family homes during the month of June, versus 106 permits issued a year ago from the respective cities.
Don Gibson, CEO of Legacy Bank, said the new construction pace appears to be sustainable as individual contractors are building three or four at a time and then selling those.
“We see a fair amount of building by the lot, not entire subdivisions like we had going on in the housing boom several years ago. The new inventory erected today is being absorbed as it is built, allowing for a more healthy market,” Gibson said.
Legacy, like other banks in the area, is working with a few home builders, to move empty lots out of their bank holdings.
“We have been working with some builders in the Hampton subdivision in Fayetteville,” he said.
Gary Head, CEO of Signature Bank, agreed the local residential market is showing signs of improvement and said his bank helps finance deals for several homebuilders who are busier these days.
“There are pockets where lots and homes are in more demand, like East Fayetteville and parts of Bentonville, at least that’s what we continue to hear from agents and builders. I know the Waterford Subdivision in Fayetteville has been quite active these days,” he said.
He and Gibson agreed that a recent tick up in interest rates has not yet dampened enthusiasm among builders. It remains to be seen how homebuyers will react if rates continue to rise. At 4.5% mortgage is still quite low in the historic scale, but consumers tend to have short memories. Rates have risen from 4% over the past six weeks, according to Bankrate.com
Jake Newell, a co-owner of Jacobs Newell Construction, said his firm has been busy in Fayetteville this year with single-family detached projects and a small town-home project in South Fayetteville.
“We are negotiating for properties near downtown Bentonville with plans to build six or seven new homes within walking distance to the square. We hope to close on the property soon and start construction this fall if all goes as planned,” Newell said.
Newell focuses on infill projects near downtown for professionals who prefer an urban living environment. Their construction also features sustainable building practices that provide the homeowners with a greener footprint.
“We think Bentonville will be a good market for our homes because of the similarities it has to Fayetteville. The cities’ downtown areas both feature multiple trail systems, farmer’s markets, lots of restaurants, entertainment options and a growing number of professionals who want to live downtown,” Newell said.
He anticipates the Jacobs Newell homes in Bentonville will be priced between $260,000 and $300,000.
Bentonville issued 33 new home permits in June with a total value of $10.34 million, that’s an average valuation of $313,000, according to city records. A year ago the city issued 35 permits for a total value of $8.94 million.
Rogers issued 42 permits in June worth an estimated $7.3 million. The city permits rose from 19 permits valued at $4.1 million in the same month of 2012.
Fayetteville’s homebuilding permits were down 3.2% in June compared to the year-ago period. The city issued 30 permits with a value of $6.1 million last month, versus 40 permits worth $8.311 million a year ago.
In Springdale, builders started 13 new homes in June. These projects had a cumulative value of $3.02 million. A year ago there were 12 projects valued at $3.26 million.
COMMERCIAL SECTOR
Head said the commercial construction sector has not yet caught up with the improvements seen in the residential marketplace. He expects it will take another year or so with continued improvements in job numbers and population growth before the needle moves much in the commercial arena.
There were a handful of new commercial permits issued in June among the four cities cited. In Bentonville, a new Kum & Go along “J” Street and the Kaleidoscope Dance Studio valued at $1.27 million will be located at 900 SE Village Loop.
Fayetteville issued permits for a new Walgreen’s at 1415 W. Wedington Drive, Andy’s Frozen Custard at 1523 W. Martin Luther King Blvd., and a Canine Connection Dog Kennel at 4942 W. Wedington Drive. The city also pushed through another multifamily home project for 150 units at the West Center Apartments located at 831 W. Center St.
In Rogers the city pushed through two new permits. One is for a large warehouse facility for HBA Holdings and U Pull-It Auto Parts also got a permit for a new facility at 600 W. Price Lane.
In Springdale, First Security Bank got a new commercial permit valued at $231,846. The 2,000 square-foot building is to be located at 5208 S. Thompson St., according to the permit.
June Residential Permits
Springdale
2012: $3.027 million
2012: $3.266 million
Fayetteville
2013: $6.1 million
2012: $8.3 million
Rogers
2013: $7.3 million
2012: $4.1 million
Bentonville
2013: $10.34 million
2012: $8.94 million
June Commercial Permits (including multifamily)
Springdale
2013: $231,846
2012: $0
Fayetteville
2013: $39.03 million
2012: $27.05 million
Rogers
2013: $3.0 million
2012: $650,000
Bentonville
2013: $1.7 million
2012: $7.32 million