Area building permit values take a dive in 2009

The numbers make a strong case for 2009 being an exception to the consistent claim that the Fort Smith regional construction sector experiences minor ups and downs.

And unfortunately, the downs were more dramatic than the ups.

The value of Fort Smith building permits in 2009 was $138.946 million, 45.5% below the 2008 value of $255.02 million, and 11.1% below the 2007 value.

Van Buren building permit values totaled $9.869 million (excluding duplex and apartment construction) in 2009, a 52.8% drop from the 2008 value of $20.913 million and a staggering 69.7% below 2007 totals.

Thanks primarily to a $3.395 million school project, Greenwood saw a gain in 2009. Building permits in Greenwood totaled $15.008 million, up 26% over the 2008 value of $11.904 million, and 0.8% above 2007 totals.

The year has an interesting distinction. Van Buren has historically outpaced Greenwood with respect to the annual value of building permits — with Van Buren’s totals higher by as low as $5 million and as high as $20 million. That was reversed in 2009.

Construction in Van Buren has dropped more than 50% since 1997. The city issued 21 commercial building permits 13 years ago, with a value of $5 million. Last year, only 10 permits, totaling $3 million, were issued. The residential story is much the same. In 1997, 147 new homes were built, costing $14 million. In 2009, only 52 residential permits were issued, with a construction value of $7 million.

“When you go back 13 years and see these numbers, it’s a real eye-opener,” Van Buren Mayor Bob Freeman said Jan. 11 at the city’s council meeting. “There’s nothing you can do about it. People just aren’t buying right now.”

To be sure, most area construction market watchers say 2008 was an anomaly because of the tremendous hail and wind damage caused in Fort Smith and Van Buren from two separate storms. Therefore, comparing 2009 to 2008 is problematic, at best.

Even so, the Fort Smith market — which accounted for more than 84% of all construction in the three-city area — was down overall (-11.1%) when compared to 2007. Commercial construction (all types) permits totaled $80.27 million in 2009, down 22.8% from 2007. The 2009 commercial activity was down 50.2% compared to 2008.

The Fort Smith residential market carried its load in 2009, with all residential construction-related permits totaling $40.93 million, up 10.3% compared to 2007 — down 45.9% compared to 2008. The 2009 value of new home construction in Fort Smith was $26.249 million, down just 0.6% from 2007.

“2009 was not a great year … but it wasn’t a catastrophic year,” said David Hughes, executive director of the Greater Fort Smith Association of Homebuilders.

Hughes said low interest rates and the expansion of the federal homebuyer tax credit helped boost the market in 2009 and should continue to help in 2010. He also said the callback of employees at Whirlpool, Rheem and Trane should help the area home construction market in 2010.

“We’re cautiously optimistic. I hate that term, but it really does apply for what we are seeing here,” Hughes explained. “That’s (area housing market) will see a slow recovery. It’s not going to be a light switch where all of a sudden it’s better. Our realistic prediction is that we’ll have a slow recovery, but we won’t have any reduction.”

Still, with the trickle down of national economic conditions, Hughes was hesitant to even offer a prediction of cautious optimism.

“I’ve been doing this a long time, and I don’t think I’ve ever seen as many (national) variables potentially affecting this market,” Hughes said.

The average value of new home construction in Fort Smith fell in 2009, matching a trend of more homes being sold in the $150,000 and under price range. The average value of new home permits in 2009 was $100,570, down 34% from the 2008 average value of $152,707, and down 9.4% from the 2007 average value of $111,042.

• FORT SMITH
Total permit value
2009: $138.946 million (3,192 permits)
2008: $255.02 million (9,613 permits)
2007: $156.392 million (2,570 permits)

New residential
2009: $26.249 million (261 permits)
2008: $30.847 million (202 permits)
2007: $26.428 million (238 permits)

New commercial
2009: $29.885 million (29 permits)
2008: $96.129 million (46 permits)
2007: $75.429 million (41 permits)

• GREENWOOD
Total permit value
2009: $15.008 million (95 permits)
2008: $11.904 million (117 permits)
2007: $14.451 million (139 permits)

New residential
2009: $7.301 million (50 permits)
2008: $7.006 million (48 permits)
2007: $11.322 million (79 permits)

New commercial
2009: $4.261 million (5 permits)
2008: $1.7 million (1 permit)
2007: $1.852 million (2 permits)

• VAN BUREN
Total permit value (excluding duplexes, apartments)
2009: $9.869 million (62 permits)
2008: $20.913 million (71 permits)
2007: $32.651 million (156 permits)

New residential
2009: $7.01 million (52 permits)
2008: $9.942 million (56 permits)
2007: $24.621 million (136 permits)

New commercial
2009: $2.858 million (10 permits)
2008: $10.971 million (15 permits)
2007: $8.029 million (20 permits)