Economic Outlook: Panelists bullish on construction market

News of national declines in real estate sales and new construction appears to be mirrored in Columbia and Boone County. However, statistics provided by panelists at the Third Annual Economic Outlook Conference dispute the perception that mid-Missouri’s building boom is fizzling.

In three presentations—illustrating construction costs and building permits; number and sales prices for building lots; and real estate tax assessments—statistics tell a different story than the popular notion that Columbia is suffering a setback in housing sales and new development.

The three presenters, Brad Eiffert, vice president of Boone County Lumber, Rhonda Carlson of C &C Construction and Tom Schauwecker, Boone County Assessor, were all cautiously optimistic and had the numbers to bolster their optimism.

“Columbia and Boone County may have a very minimal hangover from the national decline in building activity,” Eiffert said in his presentation. He conceded that population growth in Columbia was modest and did not keep pace with multi-family residential construction, but he said development and construction are not “out of balance” with upward trends in the retail sector.

Eiffert also said lot prices, rather than construction costs, were responsible for the higher prices in new home construction. “It’s not building materials that are driving the increased valuation of homes,” he said.

Carlson’s statistical information on lot prices confirmed Eiffert’s remarks. “The median price for a single-family lot has nearly doubled in three years,” Carlson said. In 2003, the median price for a standard building lot was $26,500. Today, the median price is $43,753, according to Carlson. Carol Van Gorp, executive director the Columbia Board of Realtors, also reported that Columbia and Boone County had seen a 51 percent increase in prices for land and lots.

Schauwecker maintained that mortgage interest rates were the driving force in the real estate/construction business and expressed optimism at the current lending rates. “We may have a little bit of over supply of lots, perhaps. Still, fundamentally, we are a strong market for real estate and variable loan rates are the most important,” he said.

Schauwecker said he was “bullish” on the future for the real estate and construction industries and pointed to recent developments for corroboration.

“On the horizon, we’ve got Bristol Lake, Old Hawthorne and Jose Lindner’s work on the Smith Feed Mill Track. Obviously they’re bullish on looking down the road,” Schauwecker said.

Still, there is a perception that things are awry in the construction industry, according to statistics Carlson provided from the National Association of Home Builders (NAHB). A survey that measures the confidence and optimistic outlook for builders showed that attitudes about the future of the industry dropped from a favorable 68 percent to a less than favorable 31 percent in the last 12 months.

“Builders are having a more negative feel about the market at this time,” Carlson said.

Carlson also expressed concern that the price of the average building lot was more than the average annual income for a Columbia resident. “The median lot price is $43,700 while the average annual income in Columbia is $34,400,” she said.