Blog :: 12-2006

New Construction Growth

In my last column, I discussed the increase in lots purchased in Black Mountain during the last year.  With that in mind and a number of my clients considering purchasing lots now for building purposes, I thought it would be interesting to see the patterns in the local construction market.

Through December 15 of this year, according to Dan Cordell, Town of Black Mountain building inspector, there have been 58 new building permits issued.  Compare that with 33 for the same period last year, and it is apparent that the Black Mountain area is still growing strong, unlike other areas of the country.  Nationally, the number of building permits fell in October (the latest available data) for the ninth consecutive month, reaching a low not seen since 1997. 

For Jim McConnaughy, an owner of Ewing and McConnaughy, Inc., the proof of the area's strength versus the national weakness is the number of employment ad responses he receives.

"Buncombe County construction is still good," he says.  "The problem is in Florida and other areas.  A year ago if we placed an ad we would get one or two applicants.  Now we are receiving 20 or so.  Many are out-of-town folks.  We are still busy, but the labor market isn't as crazy as a couple of years ago."

So where is this new construction occurring?  One way to track new home growth is through new customers at the electric company.  According to Gary Hamrick, resource manager for Progress Energy Carolinas, the largest growth in new customers (electric meters) is in Swannanoa, North Fork and Broad River.  In fact, he cites that over the past 7 years, the growth of new electric customers is estimated at around 700 in Swannanoa alone.

Another interesting growth trend in construction is the home size of these newer homes.  Cordell, Black Mountain's building inspector, notes that in 2005, the average size of new construction was 1,959 sq. ft.  For 2006 to date that average has grown to 2,414 sq. ft.  He adds that he is anticipating major growth in commercial and mixed use properties in the next year as well. 

One consideration when looking toward new construction is the increased costs of area building.  Since 2002, average construction costs of building permits have increased 20%.  In part this can be attributed to the larger size homes being built.  In addition, construction costs around the country have been increasing although recent soft construction markets have reduced costs in some areas.  As you can image, this decrease in construction cost is not happening in Black Mountain.

"Black Mountain cost of construction is higher than other areas," explains Maury Hurt, owner of Hurt Architecture and Planning.  "The cost of living is high, so cost of labor is high.  Also, many of the undeveloped properties are on steep slopes that tend to drive up construction costs."

Even with these higher costs, however, Hurt does not see any decrease in construction volume in the next year.  "The future of construction looks strong with so many new lots being sold in The Settings and the new lots proposed in the Cliffs' Swannanoa development."

Dan Cordell agrees.  "Based on what I'm experiencing, it would not surprise me to see the number of building permits double in the next year."

It looks like, as in the land and housing markets, Black Mountain will buck the national trend and continue growing in the next year.  Black Mountain's challeng is not how to spur growth but to find a balance between this anticipated growth in construction and protecting our natural surroundings.