Increase in 1992 permits gives homebuilders modest hopes

February 11, 1993|By Adam Sachs | Adam Sachs,Howard County Department of Inspections, Licenses and PermitsStaff Writer

Howard County homebuilders who saw the gold rush of the 1980s hit bottom in 1990 and 1991 say they see signs the roller-coaster ride is over.

Building permits issued last year for new home construction increased by 50 percent over 1991 and doubled 1990's total, signaling a "slight recovery" in the county's sagging home building industry, said John Troutman, the Howard chapter president of the Home Builders Association of Maryland (HBAM).

"While the market is certainly getting better, I can't say it's robust," said Mr. Troutman, owner of Troutman Co. in Columbia.

"We're all fighting for our market share," he added. "Market demand is not back yet. Everybody feels better, but that doesn't translate into purchases."

Howard homebuilders welcomed the modest upswing after suffering through two dismal years for residential construction.

Many builders who had prospered through the boom years, however, failed to weather the recession and aren't around to enjoy the modest recovery, Mr. Troutman said.

The county issued building permits for 2,601 housing units in 1992, compared with 1,742 in 1991 and 1,303 in 1990.

David Hammerman, county Department of Inspections, Licenses and Permits director, said he expects the gradual upturn to continue, predicting a 10 percent to 15 percent increase in permit requests for 1993.

"Inspectors are getting more calls, and work activity is picking up," he said. "I think the summer will prove to be a hectic time."

Building permits for new homes hit a high of 5,342 in 1989, after averaging 4,079 per year between 1984 and 1989.

But Howard developers say three factors contributed to the slump: a county law enacted in 1989 that caps building permits for an 18-month period; tightened banking regulations and a reluctance to lend for construction projects; and the recession, which eroded consumer confidence and purchasing ability.

"It was a triple whammy. It created such devastation in the industry, it's taken a couple of years to recover," said L. Earl Armiger, president of Orchard Development Corp. in Ellicott City.

"The industry is getting back on its feet now, but what's needed is a fairly strong market to recover from the losses of those years."

Mr. Armiger, the Baltimore region's 1990 HBAM president and the current vice president and treasurer for the Maryland Builders Association, said recent positive indicators for employment bode well for Howard's home building industry.

Mr. Armiger called 1991 the worst year Howard home builders had recently experienced and said 1992 was "clearly better. I think the market is coming back, but not in a big rush. Sales are up and traffic is up."

Mr. Troutman and Mr. Armiger both predict conditions for the industry will improve gradually in 1993, but acknowledge that future construction activity will be nowhere near the levels of the 1980s, partly because of new county growth-management plans.

The county's General Plan limits residential growth to an average of 2,500 units a year for the next 20 years.

The County Council must establish housing allocations each year for 10-year periods based on planning office projections.

Also, a new adequate-facilities law can delay a development for four years if the planned housing will cause schools in the district to exceed capacity by 20 percent.

Mr. Troutman said the county's plans to manage growth are "something we can live with and profit under."

The 2,500 building permits per year limit is "more reflective of natural market forces than the swings we had from 1987 to 1991," Mr. Armiger said.

Another positive economic indicator, new home sales, improved in 1992, according to figures from Legg Mason Realty Group in Baltimore.

The brokerage company, which surveys subdivisions on the market with 20 or more units, reported that 1,591 new homes were sold in Howard in 1992, compared to 1,511 in 1991 and 1,278 in 1990.

An average of 2,425 new homes were sold per year in 1988 and 1989.

On the negative side for the construction industry, 1992 building permits for figures show a dramatic decline in plans to construct multifamily housing.

Permits were issued to construct 48 multifamily living units in 1992, compared to an average of 1,223 per year from 1984 to 1989, and a total of 641 for 1990 and 1991.

Howard builders say a scarcity of land designated for apartments or condominiums, difficulties in financing the projects and high apartment vacancy rates have led to the decrease.

More permits were issued in June and December than any other months as developers rushed to beat new county and state rules they anticipated would drive up costs.

A new county fee levied on all new construction took effect in July and was increased last month.

1992 Howard County building permits

Month .. .. Single-family .. Town house .. Multifamily units

.. .. .. .. detached

January ... 108 ... .. .. .. 16 . .. .. .. 0

February ... 89 ... .. .. .. 54 . .. .. .. 0

March .. .. 136 ... .. .. .. 24 . .. .. .. 0

April .. .. 212 ... .. .. .. 44 . .. .. .. 0

May . .. .. 121 ... .. .. . 196 . .. .. . 48

June ... .. 376 ... .. .. . 302 . .. .. .. 0

July ... .. 239 ... .. .. ... 7 . .. .. .. 0

August . ... 75 ... .. .. ... 5 . .. .. .. 0

September .. 76 ... .. .. ... 0 . .. .. .. 0

October . .. 60 ... .. .. .. 10 . .. .. .. 0

November ... 75 ... .. .. ... 0 . .. .. .. 0

December .. 180 ... .. .. . 148 . .. .. .. 0

TOTAL ... 1,747 ... .. .. . 806 . .. .. . 48

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