The Northeast Mississippi
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THE NORTHEAST MISSISSIPPI A MONTHLY PUBLICATION OF JOURNAL PUBLISHING AND THE COMMUNITY DEVELOPMENT FOUNDATION AUGUST 2009 CONSTRUCTION, HOUSING MARKET LOOK AHEAD Prsrt Std US Postage PAID Tupelo,MS Permit #353 PAGE 2 BUSINESS JOURNAL FRIDAY, AUGUST 7, 2009 Commercial construction looks for rebound By DENNIS SEID out of every three construction Commercial permits, the rise in government con- “There’s not enough work to go BUSINESS JOURNAL jobs. struction helped offset a de- Since the recession started And according to the BLS, January-June cline in new malls, office build- around for everyone,to be honest. 20 months ago, much atten- the nationwide construction ings and other commercial We’ve been fortunate that we’ve been tion has been paid to the bat- unemployment rate rose from Oxford Starkville Tupelo nonresidential building, which tered housing market. 5.9 percent in 2007 to 8.2 per- fell 0.5 percent. able to keep the vast majority of our And the construction indus- cent last year. Currently, it’s 2008 25 107 12 In Northeast Mississippi, try is feeling the pain. tracking at a 17.4 percent rate. 2009 6 138 11 three cities had mixed results workers employed.” According to the Associated Some Northeast Mississippi over the past year. Jerry Maxcy General Contractors of Ameri- construction companies say In Tupelo, the number of they’re hurting, too. ca, construction dropped in all commercial permits in the first senior vice president of Jesco Inc. “There’s not enough work to some light at the end of the but 19 communities nation- half of 2009 nearly matched go around for everyone, to be dark tunnel. wide in June compared to a the same period a year earlier. honest,” said Jerry Maxcy, the On Monday, the Commerce But in Oxford, there were 19 year earlier. The banks are there to loan the senior vice president of Jesco Department said construction fewer commercial permits is- The AGC used information money. They are waiting for Inc., who leads the company’s spending rose for the second sued. In Starkville, permits rose gathered by the U.S. Bureau of people to step up and do it. general contractors division. time in three months in June, by 31. That’s what it takes ... it’s a Labor Statistics for 352 metro- “We’ve been fortunate that thanks in part to an increase in For the first six months of good time for building.” politan areas. we’ve been able to keep the residential building and gov- 2009 compared to the year-ago “Construction workers re- vast majority of our workers ernment-funded infrastructure period, residential construc- Mike Williams of H.M. main, unfortunately, on the employed.” projects. tion permits rose slightly, from Williams Construction said his leading edge of job losses dur- James Hunter, president of But June’s $965.7 billion in 32 to 35 in Tupelo. In Starkville, company has been more in- ing this recession,” said Ken Si- Hunter Group, said business is spending was still 10.2 percent 19 fewer were issued this year. volved with private work rather monson, chief economist for soft, but “we’re hanging in lower than a year earlier. In Oxford, 128 fewer permits than going after public bidding the group. “While other areas there. We’ve got work and The data followed earlier re- were issued. projects, which has helped in of the economy have been hit we’ve got work that we’re work- ports that new and existing While material costs have keeping crews busy. hard, construction employ- ing on getting.” home sales each rose in June, dropped or leveled off, the He also sees business slowly ment has been devastated.” Housing and credit woes and new home construction shortage of projects has put a picking up. Simonson said 333 metro have hit the construction in- also increased. strain on some companies “I think the first quarter of areas have dropped in con- dustry, as financial institutions State and local construction who are doing what they can next year we’re going to see it struction employment since have scaled back their lending rose 1 percent as spending on to keep workers occupied. improve,” he said. “The con- June 2008. Among the worst hit and tightened their standards. education and highway con- struction industry in general Said Hunter: “I’m waiting on 1 was Pascagoula, which lost one However, there might be struction also grew. However, the economy to turn around. has been starved for 1 ⁄2 years, but we’re still going to have a very competitive market.” PAGE 4 BUSINESS JOURNAL FRIDAY, AUGUST 7, 2009 Housing market feels squeeze I But the outlook looks 28 percent – from 727 to 520. said pending home sales rose new homes as there has been better as the recession “It’s beginning to flatten out Residential permits, for the fifth straight month in in the past,” Riles said. “A lot of a little,” said Louis Riles, vice January-June June. The last time there were builders simply can’t afford to appears to be waning. president of the board. “You five straight gains was July let a property sit there and wait have to consider that we are Oxford Starkville Tupelo 2003. to be sold. That’s a lot of money By DENNIS SEID still in a recession, and the 2008 165 51 32 The report tracks signed con- tied up, so they’re not going to BUSINESS JOURNAL market here has been relatively tracts to buy previously owned go overboard in building.” Real estate agents, mortgage stable compared to other mar- 2009 37 32 35 homes and is considered a The number of new housing brokers and others with ties to kets. But until we get more barometer for future home permits in area cities back up the housing industry in North- jobs, it’s going to be a little experts believe. sales. Riles. east Mississippi have long said slower than it’s been.” Existing home sales nation- The number of single-family, that the region didn’t have the Unemployment in the region wide in June rose 9 percent Holding steady residential housing permits in has been at 11 percent or high- Tupelo during the first half of big boom in the housing mar- from January and new home Home sales last year in the ket found elsewhere across the er five months this year. Fewer 2009 increased to 35 from 32 sales climbed 17 percent. area covered by the Northeast country. jobs mean fewer opportunities for the same period a year ear- Home prices, down a third board totaled 1,379. That was a Likewise, the region also did- to buy homes. from their peak, edged up in lier, but other cities saw big 10 percent drop – or 157 homes n’t experience the big bust that Nationwide, the housing May, the first monthly increase drops. – from 2007. Last year’s figure is ensued. boom was from 2005-2006. Ac- since June 2006. In the first half of 2008, Ox- But after holding its own last cording to the Associated Press, “The free fall is over,” said 78 homes – or 5 percent fewer – ford issued 165 residential per- year, the market in Northeast from that point up to the reces- Dean Baker of the Center for than what was sold in 2006. mits; through June of this year, Mississippi has slowed down – sion’s trough earlier this year, Economic Policy and Research. What is holding fairly steady it had issued only 37. Last year, at least in the first half of 2009. home resales fell 38 percent Still, he expects the housing is the number of homes on the Starkville issued 51 permits for According to the Northeast and new home sales dropped market will “be bouncing market. About 1,300 homes are the first half of the year; for the Mississippi Board of Realtors, 76 percent. Construction of around the bottom” for the sec- on the market, which is about first half of 2009, it issued 32. which gathers information homes and apartments de- ond half of the year. normal. In previous years, as The average selling price in from agents in Chickasaw, clined 79 percent. More than But, said Riles, “I think we many as 1,500 homes have Northeast Mississippi peaked Itawamba, Lee,Monroe, Ponto- $4 trillion in home equity was can clearly see better days been on the market. in 2007 at $122,428. A year ear- toc, Prentiss and Union Coun- lost, and millions faced foreclo- ahead.” “That tells us a few things, lier it was $116,000. Last year, ties, home sales from January sure. In fact, on Tuesday, the Na- among them being that there’s the average selling price was to June of this year dropped by But the worst is over, most tional Association of Realtors not as much construction of $122,049. In the first half of 2009, the average selling price fell to just over $109,000 compared to about $123,000 for the first half of last year. That means that what is sell- ing well are homes deemed “af- fordable,” or homes priced from roughly $100,000 to $200,000. Joey Guyton, of J.H. Guyton Group Realty, said demand for homes up to $200,000 has been strong and he sees the pace of home sales picking up toward the end of the year or early next year. In addition, the first-time homebuyer’s credit also is pro- viding a boost in many mar- kets. “We’re starting to see a bump-up from the credit, and there have been several buyers who have taken advantage of it,” Riles said.