UP or DOWN?: Realtors, builders have different view of housing marketPublished 12:00am Sunday, September 9, 2012
NATCHEZ — Natchez Realtors say the demand is there for new construction, but developers aren’t lining up to construct new homes yet.
And it could be years before the demand finds its desired supply.
Inside the city limits, new construction is hard to find and may always be, said Sue Stedman of Crye-Leike Realtors.
“There has been some spec construction, but it’s been very limited,” Stedman said. “Space is limited inside the city.”
Instead, most new houses are being built in the county in communities like Beau Pré.
Licensed appraiser and owner of Alliance South Justin Adcock said in many ways it’s easier to build in the county.
“There are more challenges in the city that are not in the county,” Adcock said.
Adcock said building in the city means dealing with inspectors and stricter building codes and regulations, which hurts the potential for new construction.
Even with the challenges, Stedman was quick to point out the housing market in the Miss-Lou is doing well.
“The housing market in Natchez is better than others around the country,” Stedman said. “Our foreclosure rate has been nothing compared to other areas. We’ve been pretty fortunate.”
Glenn Green of Paul Green & Associates echoed Stedman’s optimism. He said when the housing market plummeted, not much changed in the Miss-Lou market.
“Natchez didn’t have a bubble in the first place,” Green said. “We’re not seeing a lot of new construction, but the market is slowly and steadily improving in the Miss-Lou.”
According to the Realtors, many factors have affected the housing market in the Miss-Lou — one being Hurricane Katrina in 2005.
Stedman said before Katrina, house prices were much lower. It was only after the storm prices sharply increased.
She said people who lost their houses in the hurricane were looking for new places to live ,and Natchez was one of those places.
“If a house came up for sale, it didn’t stay on the market for long,” Stedman said. “The number of houses went down, and the prices went up. They have held there since then.”
Stedman said economic development could change that.
“We are beginning to see activity pick up,” Stedman said. “We already have some economic development in place. Once those businesses get settled, the demand will start to increase.”
Both Green and Stedman noted houses in the $145,000 to $200,000 range are what the Miss-Lou needs the most.
“The demand for new construction is going to pick up based on the number of employed people and there is going to be a need for houses around $165,000,” Green said.
Adcock doesn’t think the time for those houses is here quite yet, though. He said while the need for those houses will come, there is too much risk at this time for builders.
“There is not enough demand to substantiate the risk for speculative building,” said Adcock who builds spec and custom homes.
But with economic development prospects signed up and beginning plans for facilities, Stedman said she feels like the risk will be worth it.
“Right now costs are expensive for builders and most won’t take the risk unless they are confident the house will sell,” she said. “As demand builds up, there are developers out there to meet it.”
The long-term economic effect of companies like KiOR, Elevance, Enersteel and Genesis remains to be seen. Stedman said once the employees are settled and begin to have disposable income the demand for houses will increase.
“It’s going to take some time before those new employees are able to go to the banks looking for loans,” Stedman said. “It’s probably five years down road.”
While people are getting settled, Green said the need of rental property would go up.
While Woodland Hills invest John Russo agrees there is a need for houses in the $145,000 to $200,000 range, he thinks the need for new residential developments in now, not later.
“I think developing houses and economic development should run parallel,” Russo said. “There are two markets. There are the workers coming in and then there are the management and executives.”
Development of Woodland Hills began five years ago when Russo said he felt like the climate was right to start developing the 80 acres into 65 lots. He said he recognized a great demand for houses in the $220,000 to $300,000 range.
“When we started this project, Natchez had nothing of its nature, except a portion of Beau Pré,” Russo said. “We went after the $220,000 to $300,000 range because we felt like there was demand for the higher end amenities.”
He said the problem with building homes in a lower price range was finding the space to do it within state regulations.
“Natchez has the potential, if someone has the vision,” Russo said. “The need is here now.”
Adcock said despite “conventional wisdom” that the incoming economic development would increase demand; there is still much uncertainty.
“We don’t know how the market is going to go,” Adcock said. “When you buy a house people tell you the value of the house will increase. In fact, values have decreased since 2009. We’ve seen that.
“The unstable market is keeping the housing market from advancing.”
Not everyone has the same thought on the future of the market, though.
“There is a bright future coming up with the companies coming in,” Stedman said. “I have no fear the supply will be there for the demand.”
Adcock said it would be a fine line for builders to meet the demand and not over build.
“There is only a certain amount of inventory this market can take,” Adcock said. “New construction will always sell, but I don’t think that is what Natchez needs.”