New home construction permits up 38% amid housing shortage

The real estate market has faced a shortage of inventory in recent years and the new home construction industry is responding.

Jason Bekebrede, owner of Monticello Custom Homes and Remodeling and the board president of the Home Builders Association of Greater Springfield, said some buyers are turning toward custom homes.

“A couple of homes we have coming up, (buyers) can’t find anything like what they want on the market,” he said. “The only option to get what they want is to build it.”

In July, there were a little over 1,800 homes listed for sale in Springfield, according to Realtor.com. That’s 17 percent less residential properties on the market than the same time a year prior, according to the website.

Builders say, and permits issued in and around Springfield indicate, that shortage is paving the way for an increase in new home construction.

Comparing January through July in 2018 and 2015, cities in Greene and Christian counties had a 38.2 percent increase in new residential building permits, accoridng to data collected by the HBA. That amounts to 744 new residential building permits secured through July of this year in Nixa, Ozark, Republic and Springfield.

In Springfield alone comparing the first seven months of 2018 to 2017, city permit records show a nearly 26 percent increase in residential building permits.

One building company that has hit its stride in the latest construction wave is Bussell Building Inc.

“We cannot build homes quick enough right now,” said Tyler Bussell, co-owner of Bussell Building. “We’ve been [working on] over 30 customs for the past five months.

“The demand has been astronomical,” he added. We sold three houses last Friday, sold a few more this week.”

Bussell said his company has been on a faster building pace the past couple years. In 2017, Bussell Building completed 142 homes and closed on 129 before the end of the year. He expects this year’s new home construction volume to be similar.

The company recorded 2017 revenue of $28.4 million, which represents 136 percent growth over the previous three years, according to past Springfield Business Journal reporting. Bussell Building landed at No. 3 on SBJ’s 2018 Dynamic Dozen list of fastest-growing companies in southwest Missouri.

Bussell said buyers are wanting to get in on the process to customize their homes. He said his company is selling about 80 percent of its homes before construction starts.

Subdivision availability in the Springfield area also is showing the growth in new construction.

SBJ list research on subdivisions with lots availabile shows at least half a dozen subdivisons are now sold out.

In addition, Prairie View Heights, Millwood and The Lakes at Wild Horse each have less than three lots available. The Lakes at Wild Horse, located off Division Street, has plans to expand by another 63 lots next year.

Bussell said he bought dying developments post-recession, such as Jamestown in Rogersville and Vintage Hills in northwest Springfield. Both developments are completed and homes are nearly sold out.

Bussell said his company is currently working on Eagle Ridge Estates in Nixa. During Phase I of the development at the end of 2017, the company developed 92 lots and built about 70 homes. In the next two phases, they plan to add 82 lots.

Bekebrede said home building is at a more manageable pace, compared with prerecession levels.

“I think we’re at a better pace than where we were then, as far as a safer pace,” he said.
 
Bussell said home prices are now above prerecession levels. He said Bussell Building’s homes range between $105-$120 per square foot and homes with a basement range about $85-$95 per square foot.

Prerecession, new construction homes for Bussell Building were between $90-$100 per square foot, he said.

Charlyce Ruth, CEO of HBA, said although it’s a good time for builders and buyers who want custom homes, there are downsides to the jump in residential construction.

“One slight downside is if you are looking for a house, it really is a seller’s market right now,” she said.  “There is a lot of competition for the houses that are out there. It’s starting to drive the prices up a little bit, nothing significant, but a little bit. There are great houses out there, but you just have to work a little harder to find your perfect house.”