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Steep drop in housing starts

January 31, 2009|By DON AINES

CHAMBERSBURG, PA. -- The housing bubble was the first thing to burst leading into the national recession, and the numbers for 2008 in Franklin County show a steep decline in housing starts during the past three years.

There were 1,241 housing starts in the county in 2006 when construction was at its peak, according to County Planning Department figures. That number fell off to 1,045 in 2007 and dropped to 735 last year.

The estimated construction costs of those houses has fallen by half, going from $211.7 million in 2006 to $73.5 million in 2007 and $106.9 million last year, according to county figures.

"It's dead out there, although they are getting a chance to bid on some things, which they didn't get to do the last three months of last year," said Tom Hanks, executive officer of the Franklin County Builders Association, which has more than 300 members from the building trades and related businesses. Part of that is the seasonal decline in construction that comes every winter, he said.

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"Even in good years, it's slow in January," Hanks said.

Many contractors are looking to home remodeling as a way to weather the storm until the market rebounds.

Commercial construction also is down, but has not been as hard-hit as the residential construction market, Hanks said.

"If you have work, it's a recession," he said. "If you don't have work, it's a depression."

When people do start looking for houses, one problem for contractors will be the ready supply of existing homes already on the market in the county, Hanks said. At one point last fall, there were about 1,200 listed for sale, he said.

"There's typically a six-month turnaround to sell a house," Hanks said. "Now, it's a year."

"The big boom that happened a few years ago has stalled and there's a glut of properties out there," said Sherri Clayton, a senior planner for the county.

The number of approved subdivision plans was down from 365 in 2007 to 336 in 2008, indicating fewer plans to build in the near term.

Washington Township has been among the fastest developing municipalities in recent years, but permits for new housing fell 48 percent last year to 74, down from 143 in 2007, according to township data. The drop in the estimated value of land-use permits for houses was less severe, falling from $28.6 million to $23.6 million.

In 2006, the township had 184 housing starts valued at almost $45 million.

Fewer new homes being built means less growth in real estate taxes for local governments. With fewer properties trading hands, there also is a drop in revenue from the 2 percent realty transfer tax, said Linda Miller, the county's register and recorder.

One percent of the tax goes to the state, with the remaining 1 percent split evenly between the school district and the municipality where the property is situated, Miller said. In 2007, the school districts and municipalities received $7,406,000 from the tax, a figure that fell to $4,955,000 last year, she said.

The number of deeds recorded in her office decreased from 4,664 in 2007 to 3,949 last year, Miller said.

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