Home building boom expected to continue for Hoover in 2020 – Hoover Sun

A drop in interest rates spurred greater than expected home building in Hoover in 2019, and the market shows no sign of slowing down in 2020, industry observers say.

From Jan. 1, 2019, to Dec. 5, there were 443 single-family building permits issued in Hoover, according to records from the citys Building Inspections Department. Thats up 42 percent from the 312 building permits issued in all of 2018, records show.

Right now, its really booming, said Jim Wyatt, director of the Building Inspections Department. Theyre building wide open. Were not seeing any slow down at all. As long as interest rates stay reasonable, I think were going to see a continued building boom.

For the first 11 months of 2019, there were 299 closings on new homes in Hoover, compared to 236 in the same period in 2018, according to Multiple Listing Service data provided by Signature Homes.

Eighty-six percent of those 256 homes were built by Signature Homes, said Jonathan Belcher, the companys president. That compares to 175 homes closed by Signature Homes in Hoover in the first 11 months of 2018 and 198 for all of 2018.

I think from a year ago, were in a lot different position, Belcher said.

In early November 2018, interest rates on a 30-year fixed mortgage were a little over 5%, but fell to 3.5-3.75% by March of 2019, Belcher said.

That really had a huge impact in a positive way on home prices and certainly on the sales side, he said.

The average sales price of new homes in Hoover rose from $471,000 in the first 11 months of 2018 to $527,000 in the same period in 2019, Belcher said.

The Blackridge development by Signature Homes had a big impact on that sales price jump because the average sales price in Blackridge right now is $838,000, he said. There were only five homes sold in Blackridge in 2018, but there were 37 homes sold there in the first 11 months of 2019, he said.

The vast majority of new homes being built in Hoover are in Blackridge, Lake Wilborn and other sections of the Trace Crossings community, such as Abingdon and Green Trails, Wyatt said.

Homes also are being built in The Preserve, Lake Cyrus, Ross Bridge, McGill Crossings and Brock Point (on the eastern side of Hoover), but at a much slower pace, Wyatt said. The only sector of Ross Bridge still under construction is Glasscott, and those are mostly custom homes in the $1.2 million to $1.5 million range, he said.

Belcher said he does not expect to see the number of homes being built in Hoover to continue to rise. Instead, he foresees the market leveling out and stabilizing at the current rate.

There are about 1,100 homes planned for Lake Wilborn, Abingdon and Green Trails, and so far only about 300 of those have been completed, he said. Buildout for those communities should take another four to five years, depending on the interest rates and the housing market in general, he said.

There are still about 600 to 700 more homes to be built in Blackridge, and buildout there should take longer because of the higher prices, he said. Signature Homes expects to build another 18 houses in Brock Point off Shelby County 41, next to Greystone and across from Shoal Creek, and that subdivision likely will be completed in 2020, Belcher said. Homes there have been priced in the $500,000s to $700,000s.

In The Preserve, about 500 homes have been built so far, and there probably are a little more than 200 more homes still to be constructed, said Merry Leach, the lead real estate agent for The Preserve.

We still have plenty of lots to develop, she said.

Builders in The Preserve include Byrom Building Corp., Centennial Homes, FargasonBuilding Corp., Hastings Construction and Ridgecrest Properties.

There are a few home sites left in phase 14 of The Preserve, and the developer hopes to open phase 11, with more than 50 lots, in late spring 2020, Leach said. Phase 11 will include about 23 lots that are for one-level homes, she said. Were very excited about it.

Most of the homes in The Preserve are custom homes, and the average price there right now is about $650,000. The one-level homes likely will be less expensive, she said.

The low interest rates have meant many people have been able to afford more home than they thought they could, Leach said. It helps them build their dream home, quite honestly, she said.

The Hoover housing market is outperforming the market in most of the metro area, Belcher said. New home closings for the Birmingham-Hoover metro area as a whole were down 4.4 percent from 2,055 in the first 11 months of 2018 to 1,964 in the same period in 2019.

New home sales were down from 75 to 38 in Vestavia Hills, 168 to 155 in Trussville, 100 to 97 in Helena, and 85 to 84 in Pelham, Belcher said. There was increased activity in Calera, where new homes sales rose from 99 in the first 11 months of 2018 to 145 in the same period in 2019, he said. However, the average price of a new home in Calera was much lower at about $200,000, Belcher said.

Right now, there is only about a two-month supply of existing homes in Hoover and 3.9- month supply of new homes, for an overall average of 2.4 months, Belcher said. Usually, a six-month supply is deemed healthy, so supply is considered limited right now.

Excerpt from:

Home building boom expected to continue for Hoover in 2020 - Hoover Sun