Building permit rise may signal economic recovery
SALISBURY -- Wicomico's housing market is still bruised from the economic downturn, but there's hope the industry will turn the corner in 2011.
In Wicomico County, builders applied for permits on projects with a construction value of about $57 million in 2010. That's double 2009's numbers, when projects were valued at $26 million.
The county issued 69 building permits for new homes last year, up from 61 home permits in 2009, according to figures provided by the county. However, those numbers are a far cry from the height of the real estate boom and reflect the glut of properties for sale on the market.
Between January and February, seven home building permits were issued in the county.
"The bottom of the market occurred some point in the summer or fall of 2010. We're just in the infancy stage of moving in the right direction," said Bill McCain, president of W.R. McCain & Associates, a Salisbury-based appraisal firm.
Home building permits are an important indicator of economic recovery because they show growth in residential construction.
The Salisbury Building, Permits and Inspections Department issued 910 permits from March 1, 2010, through March 1, 2011 -- covering everything from plumbing work, new decks, roofing, home additions and swimming pools.
However, of those permits, only 11 were building permits for new homes.
"Houses have fell through the bottom. Everything has come to a halt," said William Holland, the department's director.
Even so, the home numbers signal slight progress from the 12 months before them, when building permits for seven homes were issued. Holland said homebuilding is a "huge driving force for the economy."
In Salisbury, the value of permitted construction projects rose to $17.2 million during the past two months. It's up from $15.2 million in the year preceding that.
McCain said builders are having a hard time because their costs have risen, while consumer price expectations have dropped. For example, homes in high-end neighborhoods in the county, such as Nithsdale or Deer Harbour, are selling right now for about $100 per square foot, McCain said. The best many builders can do is $120 per square foot -- and that doesn't include the lot price either, he said.
McCain said the inventory levels of homes are starting to drop, but they're still at least three times higher than a normal supply-and-demand balance.
"We are seeing inventory levels coming down a bit. We are seeing sales numbers headed in the right direction on building permits," he said.