New construction is a segment of the industry hit the hardest in the housing market. Builders and developers quickly became the first targets of the banks once federal regulators walked in and began trying to shore up trouble assets. New construction in the outlying communities of the Springfield, MO, area practically came to a complete stop. Finding a new construction home for sale in an affordable price range is rare now.
Looking at the national stats on new construction spending through October, it appears that we might just have found a bottom. While new construction spending did not increase significantly, it also did not fall. The graph below represents private construction residential spending v. private construction non-residential spending (courtesy of www.calculatedriskblog.com).
It appears there are two things happening here. First, residential construction spending is leveling out. Second, non-residential construction spending is rapidly declining. I don't believe we can anticipate much growth in residential construction spending nationally until the current and shadow inventory of foreclosures and short sales have been absorbed.
Much of the media is reporting an increase in construction spending for the third quarter of 2009; however, while you put this in perspective and consider that we are up about 10%, we are still down approximately 25%. (Graph courtesy of www.calculatedriskblog.com)
These figures seemed to be much the same as our local market, except for the small increase in 2009. So, I contacted the City of Springfield, City of Ozark, City of Nixa, and City of Republic for their numbers. The graph below represents the TOTAL number of permits issued for each respective city, including single-family homes, duplexes, multi-family, commercial new construction, commercial infill, and industrial.
As you can see, new construction in our local market continues to decline. I was unable to obtain any year-to-date information from the City of Nixa. I am hopeful their information will be updated soon and I will be able to track how much of a decline, if any, that community has experienced.
What does this mean to you? Many of the buyers I have worked with prefer newer homes. By newer, most define that as being less than 5 years old. Much of the new construction in our area occurred around 2005. By next year, those homes will no longer be considered "newer." Unless the new construction market experiences an upswing soon, it will become increasingly difficult for buyers to find newer homes. By this time this economy improves, I suspect there will be a tremendous demand for new construction homes.
About the author: I am full-time REALTOR® with RE/MAX Solutions in Springfield, MO, and a member of the Greater Springfield Board of REALTORS®. I have helped hundreds of families in the Springfield, Nixa, Republic and Ozark real estate markets, whether buying a home, or selling a home. Visit my website to search for All Springfield MO Area MLS listings. Want to know what our market is like? My website is also an excellent resource for current Springfield MO Area Real Estate Market Reports, as well as current market reports for Ozark, Nixa, Republic, and Rogersville.