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Building down in '08
Latest numbers show slight improvement
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Forsyth County News
2008 was a rough year for building permits in Forsyth County, and the latest numbers seem to indicate only some upswing.

“Things have slowed down a bunch,” said Janet Heard, administrative supervisor for the county’s permitting division. “It’s still not picked up.”

A decade ago, Forsyth County issued nearly 2,900 single-family residential permits. Five years ago, it was nearly 3,000. But fast-forward to 2008 and there were fewer than 1,500 permits issued.

The year 2008 started off slower than usual, averaging only about 168 single-family residential permits per month from January through July. In 2007, about 292 permits were issued during the same time frame, despite a moratorium on development.

After July, things took a turn for the worse, with single family permits dipping into the double digits. In August 2008, only 75 permits were issued and in December, only 30. And with only 27 in January, it’s not looking any brighter for 2009.

“It just all boils down to the economy. Houses are not selling," Heard said. "Lots are not selling, so therefore our business has slowed down.”

When permit applications slow, the county loses income. For an average home, Heard said the permit fees are anywhere between $700 and $900.

In 2007, the county’s Planning and Development Department revenues totaled nearly $6.1 million. In 2008, the number dropped to about $4.4 million.

The economic fallout not only affected permit numbers, but county jobs as well. The county's planning and development department lost about one third of its staff in late December when the county cut 26 positions from the 2009 budget.

The decrease in permits also reflects a struggling housing market, which trickles down to builders, contractors, subcontractors and retailers.
Pulte Homes, a frequent applicant, has cut back on their permit requests.

The company “was one of the first big builders to limit speculative building when the slow-down first came into play,” said Alicia MacPhee, division president for Pulte Homes/Del Webb.

“Most other builders began pulling back shortly after we did,” she said. “Pulte Homes is in a position of strength because of our relatively low inventory levels. This enables us to focus on building homes for which we have buyers.”

However, by decreasing the inventory of homes, the demand might increase.

“It’s all driven on supply and demand,” said Realtor Scott Whelchel, former president of the 400 North Board of Realtors. "Since the demand has dried up, the builders are just not building like they were, plus the funds are just not there.

“It’s a good thing. I really think it is. It shows the absorption rate of what we’re capable of buying, and that really needs to drop down to about three or four months, and right now, we’re at 12 months.

“If we can get rid of this glut of homes that we’ve accumulated, then the ratio would definitely improve.”

Whelchel described Forsyth as a seller’s market up until 2005. The tables have since turned, he said, and now sellers are negotiating deeply in order to sell their homes.

It appears banks are working toward selling foreclosed homes, as February and March have shown improvement, with 53 and 51 single-family residential permits, respectively. But the majority of the permits were not likely for new homes, Heard said.

“A lot of the houses the banks have foreclosed on and the banks are hiring contractors to come in and finish those houses so they can sell them, and they’re having to come back and re-permit them to finish them out,” she said. “That’s the majority of what we’re seeing. We’re accustomed to doing 50 or 60 permits a day. Now we’re lucky to do 20, so it’s slowly but surely picking up a little bit, but not that much.”

Forsyth’s foreclosure rates are at record highs, and many of the homes being foreclosed on are new homes going back to the bank to be liquidated, Whelchel said. This has a negative impact on nearby homeowners trying to sell their homes for reasonable rates.

“The banks are selling these homes at 60 or 70 cents on the dollar. It undermines the industry,” he said. “If you’re asking for $200,000 and next door, you’ve got a bank trying to unload their inventory at $150,000, then there’s no way you’re going to move your home. It eats up everybody’s equity.

“I don’t really see anything changing anytime soon unless something comes from Washington to stop it.”

MacPhee said while there are ongoing challenges, “the housing market is cyclical.”

“While it is in a downturn today, we continue to address current obstacles and position ourselves for better days.”

E-mail Jennifer Sami at