07/27/08 — Building permits down in first half of 2008

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Building permits down in first half of 2008

By Bonnie Edwards
Published in News on July 27, 2008 10:34 AM

Electrical contractor Mark Hinson is feeling the bite of slower work and higher costs in the construction industry, and he is not alone.

"It's a lot slower. Everything is slower," Hinson said while putting a circuit box in an unfinished townhouse in Dudley.

News-Argus/Bonnie Edwards

Electrical contractor Mark Hinson, at left, installs a circuit box while Lonnie Rouse holds it in place at a townhouse that is under construction in Dudley.

The national building slump took longer getting to Wayne County than in some other areas, but local building inspectors say it has arrived.

"Last year was an extremely good year, and each year did better than the year before -- until the rug got pulled out from under us," Goldsboro Building Inspector Ed Cianfarra said.

Cianfarra has issued permits for about $22.1 million worth of construction in the city for the first six months this year.

That compares to $54.9 million for the first half of 2007.

Wayne County inspectors are seeing the same effect. The value of residential permits issued during the first half of the year dropped from $34.6 million in 2007 to $28.1 million this year.

"Since 2005, housing has dropped some each year, and I'm expecting to see that for the next year unless something drastic happens," county Building Inspector Steve Stroud said.

Residential construction is suffering more than commercial, Cianfarra said. People are buying fewer new homes and remodeling more, he said.

Many economists are predicting an upturn by the second or third quarter of next year, but even when the economy does improve, Cianfarra said he doesn't expect people to immediately jump back into the housing market right away.

And even after things improve, it is going to be much easier to get a home equity loan than a loan for a new house, he said.

"You'll see a lot of people spend money to remodel and repair stuff. So next year, I will probably see a big increase in remodeling permits," he said.

Cianfarra has already seen an increase in permits for remodeling. The first six months of this year, his office has issued more than $1 million each month for such miscellaneous permits.

So far this year, the city has also issued $15 million worth of permits compared to $6 million the first half of last year for projects like electrical, plumbing, heating and air and fire protection. Cianfarra said the big jump came from permits for a new state building code requirement to install sprinkler systems in new apartment buildings and in more commercial buildings than ever before.

"It's because of the changes in the building code to make buildings safer. And it's not that far off when the time comes sprinkler systems will be mandatory in residential construction," he said. "When new things are required, this causes our numbers to go up."

Basically what has happened, he said, is there is less building activity, but it's more expensive.

"It costs more now for the contractors to go to work, and it costs more to buy the materials," he said. "That goes back to fuel prices. It's a snowball rolling down a hill, and the first thing that seems to be affected is residential

He estimated commercial construction to be down about 20 percent.

Meanwhile, in the county, commercial construction has increased over last year, Stroud said.

The county issued permits for 56 new commercial structures in 2006, another 64 in the first half of 2007. So far this year, the county has issued 81 such permits. Stroud said 43 have been for erecting new cell towers and putting up new antennae. The commercial construction costs were $3.1 million for the first half of 2007 and are $5.4
million so far this year.

And just like the their counterparts in the city, county homeowners are repairing and building on to what they have instead of building new homes.

In 2006, the county issued permits for 105 new additions worth $3.2 million. In the first half of 2007, permits were issued for 124 additions worth the same amount of money as the entire previous year. So far this year, there have been permits issued for 113 new additions, with a total value of $2.4 million.

Stroud said the sale of mobile homes has shown little change. Stroud's office issued 328 permits for mobile homes in 2007. During the first six months of this year, there have been 171 such permits issued.

"I expect it to get worse before it gets better in residential," Stroud said. "But I think we're still doing pretty good compared to other places."