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Residential contractors expected to pull 2,300 permits
By Rachel Pleasant
Staff Writer
If the latest economic forecast numbers released by the Charleston Metro Chamber of Commerce and the Center for Economic Forecasting at Charleston Southern University prove correct, residential and commercial construction in the tri-county area will remain strong during the final quarter of 2005.
On the residential side, the report predicts 2,300 residential building permits will be issued during the fourth quarter. A year ago the report estimated 1,900 would be issued, but builders beat that estimate by pulling 2,059 permits.
The chamber and CSU estimate residential permits will equal a value of $370 million for the last quarter of the year. A year ago that estimate stood at $245 million, but builders topped that prediction with a total value of $293.2 million.
Predictions for the final quarter, though stronger than a year ago, point to a slight decline in the number of projects builders will be taking on compared to earlier months this year. Third quarter results are unavailable, but in both the first and second quarters, builders pulled more than 2,500 permits.
At the Charleston Trident Home Builders Association, executive vice president Phillip Ford said predicting a slight drop in activity toward the end of the year probably isn’t off the mark. That doesn’t mean, he insisted, that residential construction is in for a long-term lull.
“We might have a little bit of a drop,” Ford said. “But I haven’t heard of any substantial issues or problems as far as sales. On the higher end, in certain areas, sales might be slowing a little bit, but I still think that mid-range and starter homes are still going to be strong.”
Sales of homes priced at $1 million or more are slowing in certain areas simply because the pool of buyers decreases as the price increases, Ford said.
“Eventually, you would think you’d have some slowdown at some point,” Ford said. “But the overall industry is going strong. How many $1 million or $2 million homes can you sell?”
Some builders are finding it difficult to find land for their projects, which could also contribute to a slowdown, he said.
Still, 2,300 permits in one quarter is a healthy number, Ford said, and the fourth quarter is typically a slower one.
“This has been a good year,” Ford said. “I think it slows down traditionally anyway during the winter months. It’s rainy, and it takes longer to get some things underway. Production slows down some. Typically, people get into the holiday season and shopping mode, and you see a drop somewhat. Typically the better months are in the spring and summer. People are over the new year and ready to look at houses.”
For the non-residential building sector, the chamber and CSU predict building permits will equal $125 million for the fourth quarter, down slightly from earlier months this year, but up remarkably from last year’s prediction of $50 million. Actual results for the fourth quarter last year equaled $45.3 million.
Because non-residential construction is directly tied to residential construction, it is logical to see big numbers for that sector, said Hank Kemp, preconstruction manager at Hitt Contracting.
“A lot of companies are having record years,” Kemp said. “Charleston is a good growth area. People are buying houses, and we’ve got to have the infrastructure to follow up—more shopping areas and more schools—that’s all part of it. Because residential has been booming for a long time, the rest of the construction industry has to pick up too.”
In a related report, the chamber and CSU predict building restorations and additions to reach a value of $55 million in the final quarter. A year ago the prediction was $50 million, but the actual results equaled $56.7 million.
Existing home sales, the forecast predicts, will total 3,600 in the final quarter. For the same period a year ago, the prediction was 2,750, but the total number of homes sold equaled 3,184.
Rachel Pleasant is a staff writer for the Business Journal. E-mail her at rpleasant@charlestonbusiness.com.
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