More single-family home building permits pulled in first third of this year than last
| Thursday, Jun 03 2010 06:23 PM
Last Updated Thursday, Jun 03 2010 06:23 PM
Building permits for new single family homes in Kern County rose almost 23 percent from the beginning of the year through the end of April compared with the same four months of last year.
That's in spite of a city of Bakersfield traffic impact fee that took effect last September. The fee roughly doubled, and home builders have filed a lawsuit seeking to reverse it.
There were 421 building permits pulled through the end of April, up from 343 during the first four months of 2009, according to the latest data available from Construction Monitor, a Cedar City, Utah company that tracks construction activity.
Total value of the year-to-date new properties was $72,975,985.
Although the increase in new home starts is promising, it's still almost five times fewer permits than were issued in the first four months of 2005.
Back then, there were 2,094 permits issued for a total value of $310,774,039.
"People are still very nervous," said Kern County Building Inspector Robert Sawyer. "There's no rebound at all. It's just brutal."
Builders appear to have received a bump from a law passed last year that extended an $8,000 federal tax credit for first-time buyers. It covered homes purchased or under contract through April 30.
Builders are apprehensive now that the credit has expired, but many say traffic through model homes remained steady or dropped only minimally in May.
"More ready, willing and able buyers have come in who feel like perhaps a window may be closing slightly," said Brian Rice, president of Bakersfield custom home builder BR Construction.
"A lot of buyers got caught up in the foreclosure and short sale frenzy thinking they would be able to steal properties with ridiculous offers, but now existing home inventory is limited and stuff that's not beat up is getting multiple offers, even above list price."
Lenders generally have been extremely reluctant to approve short sales, or sales for less than borrowers owe on their mortgages. That has kept a ton of depreciated existing homes off the market, making new construction more appealing, Rice said.
Then, too, there are just a lot of would-be buyers who are tired of sitting on the sidelines, said Matt Towery, owner of Towery Homes. Buyers who've been able to buy but were waiting for a change in market conditions are getting itchy, he said.
"We're always looking for signs of optimism, and we've seen more interest the past couple of weeks," Towery said.
But he warned that regulation and costs could potentially dampen a turnaround. Towery specifically cited Title 24, a set of energy efficiency standards that the state Legislature mandated for buildings and appliances; and the city's traffic impact fee.
"We try to absorb those costs, but in some cases we just can't because margins are too tight, so we have to raise our prices," Towery said.
There's also an "artificial cap" on what you can buy and sell a home for due to changes in the appraisal process, said Bob Decker, executive officer of the Home Builders Association of Kern County.
The Home Valuation Code of Conduct is the result of a joint agreement among Fannie Mae, Freddie Mac, the Federal Housing Finance Agency and the New York State Attorney General that took effect last year. Under the code, mortgage brokers can no longer order appraisals. Instead, either they hire appraisal management companies (called AMCs in real estate circles) who in turn hire appraisers, or banks hire appraisers directly.
This will be the first summer under the new system, and summer is the peak season for new home construction.
"It will be interesting to see what happens this summer," Decker said.
