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Franklin Co. housing numbers down

September 30, 2007|By DON AINES and JENNIFER FITCH

CHAMBERSBURG, PA. - Over the past few years, local governments in Franklin County have talked about controlling growth, but a slumping national housing market, combined with bureaucratic action in Harrisburg, Pa., has succeeding in putting the brakes on development for the time being.

The number of housing starts, subdivision plans and residential units approved so far in 2007 is far below the peak years of 2005 and 2006, according to the Franklin County Planning Department. The situation for builders took another hit in August, when the Pennsylvania Department of Environmental Protection (DEP) ordered a moratorium banning new connections to the sewer system serving Chambersburg and Guilford, Greene and Hamilton townships.

"When you can't get building permits, you can't build, and (the Chambersburg area) is the biggest area we have for growth," said Thomas L. Hanks, executive officer of the Franklin County Builders Association.

"For you, it's an inconvenience. For our members, it's a crisis," Hanks said he recently told borough officials. Borough Council President William McLaughlin said at last week's council meeting that the municipalities have sent a corrective action plan to the DEP, and are working with the state to end the moratorium.

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Through the first eight months of 2007, there were 628 housing starts, according to the Planning Department, along with 265 subdivision plans and 1,304 residential building lots. The last two numbers work out to less than five building lots per subdivision.

In 2005, the 473 subdivision plans comprised 6,487 residential lots, an average of nearly 14 per plan, according to county records. The number of approved residential lots dropped to 5,410 in 2006, but housing starts were a record 1,254.

The land rush that began in 2002, when the number of residential lots approved nearly doubled to 2,116, slowed dramatically this year as the housing market cooled nationally. Hanks, whose association has almost 400 members in all aspects of the building trades, as well as lenders and Realtors, said it has a snowball effect on the local economy.

"When you don't have the business, you don't need to hire people," Hanks said. Contractors, subcontractors and suppliers tend to cut back to weather a slowdown, he said.

One smaller contractor, who built a dozen houses last year, has built only two this year, Hanks said. Companies that could not build homes fast enough a couple of years ago are shifting to renovations and remodeling, he said.

The changing market

What customers want to buy also has shifted with the changing market.

"With the market conditions, we're trying to find a price point that will sell," developer L. Ray Rachuba said. The vice president of The Rachuba Group, based in Eldersburg, Md., talked about basic, starter houses as being a forgotten market.

"I'm just as guilty as anyone for overpaying for land and trying to maximize (a return)," he said. "We forgot, I guess, that pull for a 350- or 400-thousand-dollar house is only so strong."

Rachuba now is looking at land his company owns near Chambersburg for single-family houses on quarter-acre lots priced at $179,900.

"Whether I can do them or not, I don't know because with the lower prices, you get fewer features," he said.

Home prices in Franklin County jumped 20 percent in 2005 and 13 percent in 2006, according to Eric Gossard, vice president of the Pen-Mar Regional Association of Realtors Inc. Prices still are rising, but the increase probably will be 5 percent to 7 percent this year, Gossard said.

"My personal opinion is, and always has been, that prices are going to level off," Gossard said.

Rachuba cut lot prices in half in the Antietam Commons development in southern Franklin County's Washington Township. He also bought Mill Creek Acres in Chambersburg from Ryan Homes, dropped the asking price of each house $40,000 and offered closing assistance.

Developers accustomed to getting 18 percent to 20 percent profit now are looking at 7 percent or 8 percent, Rachuba said.

"You're really doing it to trade dollar for dollar. The bank still has to get paid," he said, adding that sellers of raw land aren't cutting their prices.

The moratorium in and around Chambersburg could be beneficial because existing inventory can be sold off, Gossard said.

He said 257 houses sold in Franklin County in August, a month when there were 1,392 active listings. The houses that sold mostly were priced less than $250,000.

Gossard contended that fewer housing starts might not be a strong reflection of the local market since new construction never has been the biggest part of the county's real estate scene.

"Most of the sales our real estate agents do in Franklin County are resales," Gossard said.

Moving to the county

An element of Franklin County's market vitality has been and continues to be an influx of people from out of state, but Rachuba said buyers who might once have looked at Franklin County are being lured by falling housing prices in Maryland and West Virginia.

Retirees still are making the move to Pennsylvania for tax benefits, but those still working might be pulled elsewhere, Gossard said.

"The gas prices affect the distance people are willing to drive to work," he said.

While fewer houses are being built in Franklin County than in Maryland or Washington, D.C., the county fares well in comparison to other parts of Pennsylvania, Gossard said. Hanks said the county continues to be one of the fastest growing in the state, which bodes well for the housing market's future.

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