Builders wait out 'housing correction'
New housing permits in region drop 50 percent in January
Listening to builders, one would think 2007 has the potential to be a good year for new home construction.
A quick look at the numbers, however, paints a different picture.
The total number of new housing units authorized for construction in January of 2007 fell more than 50 percent in Central Massachusetts and MetroWest compared with January of 2006, and more than 40 percent compared to January 2005, according to statistics compiled by the U.S. Census Bureau.
Permits were issued for 144 total units in the region during January 2007, compared to 311 in 2006 and 253 in 2005. The 2006 numbers were skewed, however, by a large multi-family project in Shrewsbury that added close to 100 units in January in that town alone. Without those homes, the decline would be closer to 25 percent.
Despite the grim statistics, area homebuilders say those numbers are somewhat misleading, given current market conditions and the nature of a market correction that took place last year after a five-year housing boom.
A longer view
"Historically, the numbers we're seeing so far this year really aren't that bad," said Guy Webb, executive director of the Builders Association of Central Massachusetts.
A particularly mild winter coupled with what looks to be a stabilization in the new home sales market has some builders optimistic about 2007.
According to a report issued by the Boston-based Warren Group, single family home sales statewide fell 1.4 percent in February of this year over February 2006. Year-to-date sales, however, were up 2.2 percent after a brisk January. January sales were up 5.1 percent over 2006, the first increase over previous-year numbers in more than two years.
"Personally, I took three deposits in December, one in January and two in February," said Len Gengel, owner of C & S Builders in Rutland. "December and January historically have been dead, but these two months things really picked up. Some was weather related, that helps, but we've had great traffic overall. As far as 2007 goes, I'm cautiously optimistic for a good and stable year."
Nevertheless, Webb said, buyers are still hesitant to enter the market, though he expects that to change.
"People have been on the fence for a while now, but now they're coming off and making a decision, one way or another," he said
Zoned for growth
Webb identified the Route 146 corridor as an area ripe for new home development, while Gengel pointed to communities like Shrewsbury and Westborough that have historically embraced growth.
Ron Alarie, Shrewsbury building inspector, said after several years of accelerated growth in the single family home market in Shrewsbury in the late 1990s and into 2000 and 2001, the past five years have seen a significant slowdown in that segment. Picking up some of that slack has been an upturn in senior housing communities and large multi-family projects, including the Avalon Bay project, a 250-unit rule 40B affordable housing project.
Both Gengel and Webb said that a lot of the potential for housing growth in the region depends on the attitudes of individual communities.
"There's 351 towns and communities in this state and 351 cookbooks for development in those towns," Gengel said. "You have to navigate through that cookbook to learn what those towns want."
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