Housing starts in Henderson running at half of 2021’s pace
HENDERSON, Ky. – Homebuilding in Henderson and Henderson County is down sharply this year compared with last year.
In May, a prime month to start construction, the city codes office issued permits for four new single-family homes — including three by Habitat for Humanity of Henderson — while the county codes office issued no permits for new homes. That’s half as many as the eight housing starts in May 2021.
So far this year, the city and county have issued permits for 12 new houses — seven in the city and five in the county — compared with 29 during the same period in 2021. The city issued no permits for new homes during the first three months of this year, and the county issued none in March or May.
The cost of building materials could be a factor, city codes administrator Steve Davis said.
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Certainly prices have been volatile. After spiking in 2020 and peaking in May 2021, lumber futures prices retreated to near-normal prices late last summer. Prices spiked again over the winter, though futures have dropped 60% since the most recent peak in early March.
“I’d say building costs have gone up 15-20%”, George H. Warren, executive director of the Audubon Area Home Builders association, said. “Looking at a $200,000 house, you’re looking at $30,000 to $40,000 in additional costs. That makes (buying an) existing home more attractive” than constructing a new house.
Meanwhile, mortgage rates have been climbing as the Federal Reserve has increased interest rates in an effort to control inflation. The average 30-year firm mortgage rate has climbed from about 3% in late 2021 to 5% now, according to Freddie Mac’s weekly survey.
Is all that enough to cause local housing starts to drop by more than half compared with a year ago?
Warren noted that the Fed didn’t raise its benchmark interest rate until early May, so that wouldn’t explain the slowdown earlier in the year.
A greater issue in his mind was the long drought in attracting new industry to Henderson County. He said after Columbia Sportswear located a distribution center in the Four Star Industrial Park near Robards in 1994, Henderson didn’t announce a major new industry until last year, when Pratt Paper said it would build a 325-employee corrugated box recycling mill and box manufacturing plant on the Kentucky 425/South Bypass that’s now projected to represent a $500 million investment.
“We have had expansions” of existing industries, Warren noted. “But new industry gets developers excited.”
“Henderson offers some great opportunities for community involvement,” he said, “but there’s something we’ve got to do to get more people to build rather than announcing new plants every 18 years.”
In the meantime, per capita income in Henderson County, at $44,793 in 2020, is below the state average that year of $47,339.
“Homebuilders do not want to take a risk of a half-million to million-dollar investment on a development” when local incomes are below average, Warren said.
And, he said, “We are losing population. As a community we’re losing, not growing.” Census Bureau figures indicate that Henderson County’s population has fallen from 46,250 in 2010 to an estimated 44,329 as of July 1, 2021.
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“From my figures, in 2021 excluding Habitat (for Humanity new houses), we had 49 new homes permitted,” Warren said. “… Owensboro in 2021 had 388 new home permits. Owensboro is not eight times better than we are.”
“I’ve been trying to talk to community leaders about (the lack of home) building for the last five or more years, and no one has a real reason why,” he said. “I think part of it is, we’re not benefiting from (growth in) Evansville at all as far as I can see, whereas you go to Cincinnati, (nearby) Northern Kentucky is growing by leaps and bounds. If go to Louisville, outside areas are growing are by leaps and bounds. The same thing is true for Lexington. If anything, the Evansville/Newburgh area is taking homebuilding away from us instead of providing us homebuilding. It’s been going down for five to seven years. “
But he believes there is a market for new houses here. “Hugh Stone & Son in Canoe Creek (II subdivision) have been very successful,” Warren said. “They’re building an affordable, quality home in that $175,000 to $200,000 price range.”
“I really don’t know exactly what’s going on with decline in issuance of permits in Henderson,” Missy Vanderpool, executive director of Henderson Economic Development and former association executive for the Henderson Audubon Board of Realtors, said. “I know there’s a housing shortage nationwide.
“We do recognize that and monitor that for economic development,” Vanderpool said. “We identified that need and we’re making that a strategic goal of ours for workforce attraction and talent attraction. We’re working with several community partners to see if we can help that and make some progress on housing starts in Henderson. As we add jobs, we need to add people.
“I don’t know that we ever completely rebounded from the recession (from late 2007 to mid-2009) in housing starts,” she said. “That’s not specific to Henderson. It’s a nationwide thing, statistically. We’re working on a broad digital marketing campaign with the goal to increase the awareness of employers to available jobs in Henderson. We’ve got to have housing starts to increase the workforce. … We’ve got to do some speculative building. I think they’ll sell fast.”
In other construction matters, the biggest commercial permit of the month was a $465,000 permit issued by the county codes office for construction of a 18,352-square-foot horse barn at Ellis Park.
The city, meanwhile, issued a $195,600 commercial remodeling permit to Henderson County Public Properties Corp. for the new Real I.D. and regional drivers testing office at 384 Borax Dr. beside the Henderson County Detention Center.
So far this year, the city and county have issued permits authorizing $151.9 million, which includes a $125 million permit issued in April for the construction of Pratt Paper’s recycling mill on the Kentucky 425/South Bypass.
Excluding the big Pratt project, permits were issued for $26.9 million of construction work during the first five months of this year, compared with less than $13.4 million during the same period in 2021.
Here are the building permits issued last month:
May building permits
City
Antenna: Shields Developers LLC, 220 Priest St., $19,000.
Commercial remodeling: Henderson County Public Properties Corp., 384 Borax Dr., $195,600.
Single-residential residential demolition: Mildred Cassidy, 2004 Reid Dr., $5,000; Glen D. and Judith A. Stone, 123 S. Main St., $8,000; Barry D. McGarrh, 1425 Helm St., $3,000; and Countrywood Home Builders Inc., 801 Pond St., $1,500.
Manufactured homes, new: Robert and Mary Laughary, 1522 Loeb St., n/a; and DBA Clayton Homes #646, 217 Meadow St./, n/a.
Single-family accessory: Drew and Melanie Mays, 1356 Dylan Circle, $34,000; Felipe F. and Amalia F. Juan, 516 Ray St., $2,000; Tracy L. Higginson, 226 Springer Dr., $30,000; Darin and Laura Frields, 7110 Airline Road, $60,000; Justin Steil, 1316 O’Byrne St., $1,200; Steven B. and Tina A. Wheatley, 901 Watson Lane, $14,000; HCM LLC, 1450 Arrow Way, $5,770; and Heidi S. and Robert E. Todd II, 612 Gadwall Lane, $40,000.
Single-family residential additions: All American Home Improvement LLC, 228 Jefferson St., $6,000; and Codie Comer, 306 S. Main St., $7,500.
Single-family new residences: Natasha Burnside, 850 Kentucky 2084-South, $525,000; Habitat for Humanity Inc., 1012 Pringle St., $119,000; Habitat for Humanity of Henderson, 1218 Washington St., $130,000; and Habitat for Humanity of Henderson, 829 Powell St., $119,000.
Signs: Marco Enterprises LLC, 2611 U.S. 41-North, $31,900; El Primero LLC, 122 First St., $3,000; Village Housing Partners XI LP, 1056 Saddlebrook Dr., $1,500; Housing Authority of Henderson, 111 S. Adams St., $25,000; Eveland Enterprises LLC, 301 Kentucky 2084-South, $n/a; Bryan S. Young, 1232 Atkinson St., $1,997; Custom Sign & Engineering Inc., 603 Barret Blvd., $9,366; Hinderliter Construction Inc., 2120 S. Green St., n/a; Hoards Custom Signs LLC, 1636 Clay St., n/a; and Hoards Custom Signs LLC, 301 Kentucky 2084-South, n/a.
Total: $1.4 million
County
Room additions: Michael Mabee, 1050 N. Forest Oak, $40,000; and Brian K. Jewell, 3822 Old Robards Road, $70,000.
Commercial: Ellis Park Racing, 3820 U.S. 41-North, $465,000.
Raze and remove: 31-W Insulation, 3820 U.S. 41-Alternate, $3,500; and Warren Investment Group, 8381 Wathen Lane, $5,000.
Manufactured homes: Marie Kirtley, 7277 Sulphur Springs Road, $115,000; and Steven Stinson, 17779 Kentucky 416-East, $190,000.
Garages and utility structures: Robert Jones, 1531 Autumn Lane, $23,500; Samuel Lingerfelt, 3881 Ridgelane Dr., $6,000; Jeffrey Brack, 7189 Rucker Road #1, $16,601; Donna Fambrough, 3985 Melody Lane, $19,000; and Steven Stinson, 17779 Kentucky 416-East, $27,000.
Total: $980,601
This article originally appeared on Henderson Gleaner: Housing starts in Henderson running at half of 2021’s pace
