CANTON — When Nissan’s new hires go shopping for a new home in metro Jackson, their buying clout will allow them costlier choices in the residential housing market, and may open up a demand in the $200,000 to $250,000 price range.
“The buying power Nissan employees will have will change the residential housing market,” said Mark S. Bounds, president of Mark S. Bounds Realty in Madison.
Nissan plans a spring ground-breaking on its $930-billion automotive assembly plant in Madison County.
Assuming most Nissan workers are two-wage earner households, with a total income of $70,000 for a Nissan employee and a spouse, they’ll qualify for homes around $225,000, Bounds said.
Joe McNeese, president of the Mississippi Mortgage Bankers Association, said that figure was “about right.”
“Underwriting guidelines say that a person’s monthly housing expense should represent 28% to 30% of their gross monthly household income, and simply because of their size and pay scale, we anticipate Nissan employees will have a strong impact,” he said.
The Nissan plant, currently under construction in Madison County, will initially employ 3,300 workers when it opens in the summer of 2003, with plans to expand to 4,000 workers at full capacity. The average pay for Nissan employees has been reported at $23 hourly, or about $48,000 per year. (Since starting operations in Smyrna, Tenn. in 1983 with 2,200 workers, the Nissan plant now employs 6,000.)
John Dinkins, president elect of the Mississippi Association of Realtors, and a developer at Lake Caroline in Madison, said he believes “there will be demand for $225,000 homes, but also for lower priced homes as well. When you’re talking about 4,000 people coming in, and a potential of thousands of other jobs around Nissan, there will definitely be demand.”
Right now, there’s not adequate housing stock available to meet the needs of Nissan employees, especially in south Madison County, McNeese said.
“When you look at the influx of employees and suppliers coming in, I don’t know of any area in the state that has the housing capacity to meet that type of demand,” he said.
At press time, 2,299 properties in Madison County on the market listed in the $100,000 to $199,000 price range. By comparison, there were 873 properties for sale in the $200,000 to $299,000 price range, and 274 properties in the $300,000 to $399,000 price range. Those numbers don’t include homes listed for sale by individual owners, said Annice
McVicker, broker/owner of AM Enterprises Real Estate Inc. in Ridgeland.
“The comments I have heard is that sellers wish they could wait for the Nissan plant to open, because they know they would get more for their properties,” McVicker said. “However, most people have reasons that lead them to sell now at the highest dollar they can get in the present market.”
Cheryl Bullock, executive director of the Jackson Association of Realtors, said she couldn’t say whether the “Nissan factor” would impact one specific price range of residential homes more than another.
“We haven’t looked at the demographics yet, but I can’t see anything in the statistics that would let me say it would impact one price range more than another right now,” she said. “I tend to look at the ‘days on market’ category rather than a specific price range to determine the areas in high demand. I think we’ll see an impact broader than just the tri-county area.”
All states knew the Nissan impact would be much broader than just the immediate area, Dinkins said.
“Some of the people in Smyrna have Nissan employees that commute from up to 100 miles away,” he said.
Instead of building larger homes to fit that price range, there’s a trend to develop neighborhoods with smaller homes, say 1,200 to 1,600 square feet, priced at $120,000 to $160,000.
But not in the City of Madison.
“A few years ago, the City of Madison imposed a moratorium on building houses less than 1,800 square feet in the city limits, and within a mile outside the city limits, which automatically put the price tag of a new home at $175,000 and up because of the price of land and building costs,” said John Jordan, a homebuilder in Madison. “I’ve seen a demand for houses under $170,000, and there aren’t that many listed in the city limits of Ridgeland or Madison.”
“Two wage earner income families may qualify for more house,” Jordan said, “but I think they may chose to settle into something less expensive.”
At Red Oak subdivision in Gluckstadt, located approximately three miles from the Nissan site, developers Bucky Gideon and Hollis Shoemaker have sold 150 of 209 lots, featuring 1,500-square-foot homes for $125,000 and up, in less than four years.
“The lots sold well before the Nissan announcement, and have continued to sell well since then,” said Gideon. “The demand is there. As far as Nissan’s impact goes, it’s still a ways off before employees are hired to start working at the plant. People may initially drive from 50 miles away, and move closer after they make sure they’re secure with their new job.”
Contact MBJ contributing writer Lynne Wilbanks Jeter at email@example.com or (601) 853-3967.