Area building permit values fall more than 51%

The combined value of building permits issued during July in Fort Smith, Greenwood and Van Buren fell more than 51% compared to July 2009, with the decline pushing year-to-date Fort Smith permit values down more than 23%.

Total value of the 178 permits Fort Smith issued in July was $7.537 million, down 14.5% from the July 2009 period. Commercial permitting was up in July, with the city issuing 27 permits valued at $4.104 million, up substantially over the June 2009 commercial permit value of $1.331 million.

Residential construction, or a lack thereof, resulted in most of the July decline. The city issued 11 permits for new home construction valued at $1.878 million in July, down 22.5% in value from the 25 permits valued at $2.425 million in July 2009.

Up until July, the new home construction sector in Fort Smith was hot. June marked four months of year-over-year gains in the number and value of new home construction in Fort Smith.
• June 2010: $5.159 million, compared to $2.261 million in June 2009
• May 2010: $4.789 million compared to $1.716 million in May 2009
• April 2010: $4.51 million compared to $4.49 million in April 2009
• March 2010: $5.976 million compared to $2.02 million in March 2009

A federal tax credit for first-time homebuyers and the expiration of that credit is the primary reason for the surge and decline, respectively, in new home construction, explained David Hughes, executive director of the Greater Fort Smith Association of Homebuilders.

The federal tax credit provided up to $8,000 for first-time home buyers and up to $6,500 to home buyers. The program requires homes to be under contract by May 1 and close before July 1.

“I think it goes back to that deadline on the tax credit. There was a push to get the building plans ahead for that deadline. And what that does is then suck the air out of the room for the next six months,” Hughes said.

He also expects fairly weak housing demand in future months “because of uncertainty in the consumer market and because of uncertainty with what Congress is doing.” And if the economy doesn’t begin to “ramp up,” Hughes says the second half of 2010 will be slow with respect to new home construction. He is particularly troubled with the high unemployment rate.

“I don’t want to be a negative nabob here, but I have to be pragmatic about what I am looking at, about what the market looks like,” Hughes said.

For the first seven months of 2010, building permit values in Fort Smith total $70.353 million, down 23.19% from the $91.599 million during the same period of 2009.

GREENWOOD, VAN BUREN
July permit values in Greenwood totaled $897,110, a huge drop from the $4.489 million in July 2009. However, the bulk of the July 2009 value came from two commercial permits with a combined value of $3.395 million. The permits were for storm shelters near Greenwood High School and East Hills Middle School.

The south Sebastian County city also saw a drop in new home permits, with three issued valued at $640,400. During July 2009, the city issued eight permits valued at $1.05 million.

The story was worse in Van Buren, where permit values totaled $138,700, down from $4.228 million in July 2009. The July 2009 numbers included a permit for a $2.891 million apartment complex.

Van Buren is likely to have a respectable 2010 permit total thanks to a $13.587 million permit issued for King Elementary School. During April, Van Buren officials issued permits valued at $13.965 million, compared to $1.501 million in April 2009.

Combined, Fort Smith, Greenwood and Van Buren permits totaled $8.555 million in July, down 51.2% compared to the combined value of $17.534 million in July 2009.