NWA Housing Rebound Cheers Homebuilders

by Marty Cook  on Monday, Apr. 14, 2014 12:00 am  

Across the Board

The housing recovery has started and is gaining strength in all price ranges, homebuilders across northwest Arkansas said. The recovery isn’t approaching the manic heyday of the early 2000s, but that’s not necessarily bad or unexpected.

The most cautious recovery in the home sector is among the upscale builders. True, millionaires with no money worries are always going to find willing homebuilders, but builders on the level below those million-dollar estates are calculating risk more closely.

Harris said his business is good. The builder said he used to build 25 houses a year that averaged about $400,000 but has streamlined to building fewer, but more expensive, houses in upper-income areas like Shadow Valley and Pinnacle.

The demand for upscale homes is returning, Harris said. He said one factor in new home construction is the lack of suitable houses already on the market.

Someone who wants to buy a modern $500,000 home might find those in the price range are dated stylewise because of fashion changes in the past few years.

Rather than buy one on the market and spend thousands on a remodel, a customer might find it easier to custom-build a new one, Harris said.

“With the national economy doing better and the local economy doing better, people figured out the world was not coming to an end,” Harris said. “There was some pent-up demand.”

Lance Johnson said his construction company expects to build about eight homes this year in the $350,000 to $750,000 range. He calls the current market the best he has seen in six years.

“We’re not building anywhere near the houses we built 10 years ago,” Johnson said. “For a three-year period, we sold two or three $550,000 houses a month. I knew it couldn’t go on forever.”

Johnson said when he builds the upscale home now, it’s almost totally a custom job based on money in hand. He said if he pre-sells two homes he might then build a third speculatively — that is, build it and hope someone comes to buy it — but spec houses are no longer the norm. “In west Benton County, you see large houses being built,” Johnson said. “They’re under contract before they start.”

Johnson said builders were hurt because the housing market didn’t slow down over time; instead it screeched to a halt like someone pulled a parachute brake. Those who didn’t plan ahead for a slowdown or have reserves to survive through the downtime were in for major whiplash.

Riggins, who has been in the business for 23 years, said he builds about 300 houses a year and they are priced as low as $150,000 and as high as $800,000. During the crash, Riggins said, he built about half that number.

Johnson said he had money in the bank and was able to survive the crash. He has two full-time employees now, compared with 14 a decade ago.

“That’s what causes five years of heartburn,” Johnson said. “I don’t want to ever live that again.”

 

 

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