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Longview-area builders see 'move forward' in 2013

By Mike Elswick melswick@news-journal.com
Nov. 10, 2012 at 11 p.m.

A sampling of Longview-area home builders indicates they are bullish on the future.

Builders Jason Horn, Rodney Riley and David Mitchell said 2012 has been a solid year for their businesses, and they are expecting improvement in 2013.

Mitchell said his crews are already lined up to work on several homes in the coming year.

"It's still not like it was in the early 2000s, but for me this has been a lot better year, and it's definitely picking up," Mitchell said. "I'm seeing more interest in larger homes, and if people have good credit and can afford it, this is a good time to build."

Overall in the city of Longview, home construction was down in the 12-month period ending Sept. 30.

There was $26.9 million worth of new single-family home construction permits issued in the 2011-12 fiscal year.

That was down about 6 percent from the $28.5 million worth of homes built in the city in the 2010-11 fiscal year, officials reported. There were 161 single-family permits issued in the just ended fiscal year, down from the 183 permits issued the previous year.

Mitchell said home mortgage interest rates remain at near historic levels, and the East Texas economy has remained stable.

"For us in East Texas, it's like we live in a bubble (economically); we're not nearly as impacted by things happening nationally as other areas - we just haven't been big booms or busts," he said.

Horn has been involved in the construction business about 15 years and has been building full-time the past four years. He said his firm built about 12 homes in the past year.

"We've been very busy and are seeing more growth," Horn said. "We're seeing a lot of people transfer in from other areas and out of state."

<strong>The future</strong>

Horn said he already has six homes lined up that his firm will be starting construction on in 2013.

"I really think 2013 will be a move forward year," he said. He is among home builders highlighting their workmanship on the East Texas Builders Association 2012 Parade of Homes and said there is a lot of interest from prospective clients.

"We had more than a thousand people come through this past weekend and expect to be busy this weekend, too," Horn said. The parade of homes is 1-5 p.m. today.

Gary Closkey, a Marshall-based builder who has a Hallsville home on the tour, said he has seen activity pick up.

"In addition to being builders, we also design, and we've seen a lot of activity from people looking at plans," Closkey said. "We get an early peek at things that may be coming down the pipeline in three or four months with those clients - we've really seen activity increase."

Rodney Riley with Riley Custom Homes said he feels confident enough about the future of new home demand in the area that he is planning to venture out into developing his first subdivision next year. He said that north side development will have about 40 lots.

"And I'm working with another builder in their subdivision where I bought six of the 15 lots available and will be building on those," Riley said. He also has a home in the home tour, which he said sold about three weeks before the event started this past weekend.

"I'm still doing one or two spec homes at a time and haven't had any sit on the market," Riley said. Looking toward 2013, he expects to be busy, but he also expects prices to likely go up as prices for lumber and other materials go up as demand is anticipated to rise.

<strong>Solid investments</strong>

"People see homes as a good investment," Riley said.

With low yields on certificates of deposit, other types of investments and the often unstable conditions in the stock market, Riley said many East Texans are using some of their assets to invest in new homes.

Dan Droege, market president for First Bank and Trust of East Texas, said his institution is seeing more requests for home loans.

"Our bank is really seeing an increase in home loan financing, both purchase money and refinancing," Droege said. "Our pending pipeline of loans are the highest they have ever been."

To help meet that demand, Droege said First Bank and Trust of East Texas recently hired a mortgage loan originator.

"She (Taylor Glezen) has hit the ground running and has been very busy working on new loan requests," he said. "We are seeing a lot of activity in the mortgage loan business here in Longview."

Yet another indicator of strengthening of the local housing market is that, in September, Longview was one of three Texas cities named among the 10 best small towns for housing investment by Washington, D.C.-based HomeVestors of America and Local Market Monitor

Corpus Christi ranked No. 4 on the list, Tyler No. 7 and Longview was ranked No. 8 by the organization because they are considered less risky for investors looking to purchase single-family homes as rental properties.

"Many of [the markets on the list] not only have unemployment rates well below the national average, but they show strong job growth and housing prices have bottomed out," said Ingo Winzer, Local Market Monitor president.

<strong>Remodeling rebound</strong>

While city permits for new single-family homes were down for the Oct. 1, 2011, to Sept. 30 fiscal year, officials reported a jump in building permits issued for remodeling work.

There were 482 permits issued for home remodeling work in the past year, up by 22 percent above the 396 the city issued in the previous fiscal year. The value of those permits was up 8.1 percent from a year ago with $4.59 million worth of permits issued compared to $4.24 million the previous year.

The National Association of Home Builders recently released a monthly remodeling market index that indicates remodeling work is on the rise nationally, too.

In late October, the association reported the index is at its highest point since the third quarter of 2005, tracking the positive trends recently seen in the rest of the housing sector.

"The strength of the RMI, especially in owner-occupied properties, shows that home owners are investing in remodels as home prices stabilize," said association remodelers Chairman George "Geep" Moore Jr., a remodeler from Elm Grove, La. "As owners become more confident that investments in housing will hold their value, they are beginning to undertake projects to improve their comfort that they had been putting off."

All three indicators of market conditions improved: maintenance and repairs, minor additions and alterations and major additions and alterations.

The association reported that market conditions improved or held steady in all four regions in the third quarter of 2012. Remodeling activity was particularly strong in owner-occupied housing, officials said.

"The improvement in the RMI (index) provides more evidence that the remodeling industry is making the orderly recovery from its low point in 2009 as we've been expecting," said association Chief Economist David Crowe. "Although remodeling projects over $25,000 are now showing some signs of strength, they are still lagging behind smaller property alterations and maintenance and repair jobs."

<strong>National perspective</strong>

Sales of newly built, single-family homes rose 5.7 percent to a seasonally adjusted annual rate of 389,000 units in September, according to newly released figures from HUD and the U.S. Census Bureau. This is the fastest sales pace recorded since April 2010.

"Combined with consistent, positive reports on housing starts, permits, prices and builder confidence in recent months, today's data provides further confirmation that a gradual but steady housing recovery is underway across much of the nation," said Barry Rutenberg, chairman of the National Association of Home Builders, in a prepared statement. He is a home builder from Gainesville, Fla.

"Consumers who have been on the sidelines during the past few years are deciding now is the time to go forward with a new-home purchase, assuming they can qualify for a good mortgage under today's exceedingly stringent guidelines," Rutenberg said.

"New-home sales this year have consistently and significantly out-paced their year-ago levels as favorable interest rates, rising prices and improving consumer confidence have driven demand higher," said Crowe, the association's chief economist. "Meanwhile, despite a small increase in the inventory of new homes on the market in September, the number of completed new homes for sale is now at an all-time low and the month's supply is at its tightest since October 2005."

Crowe said this is an indication that builders continue to have a tough time obtaining construction credit, even as demand for new homes increases.

Three out of four regions registered substantial gains in new-home sales this September, including the Northeast's 16.7 percent increase, the South's 16.8 percent increase and the West's 3.9 percent increase. The Midwest was the exception, with a 37.3 percent decline.

Meanwhile, the inventory of new homes for sale inched slightly upward to a still-low 145,000 units in September, which is a 4.5-month supply at the current sales pace.



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