Mississippi home starts still strong; high demand for labor

by Becky Gillette

Published: June 27,2005

Housing starts in the U.S. posted their biggest drop in about 14 years in March, with starts down about 17.6%.
Mississippi seems to be largely immune to that trend, according to home builder representatives from around the state who spoke with the Mississippi Business Journal in recent weeks.

“We have a very strong market in Mississippi,” said Marty Milstead, executive vice president of the Home Builders Association of Mississippi (HBAM). “Starts in the Jackson metro area are up. Interest rates are still very attractive. It is a good time to buy a home. The home building market in Mississippi is solid.”

Milstead said economists have predicted a strong housing market in the U.S. this year, and the decline in March starts could have been weather related. It has been a wet spring in Mississippi, and that has caused some construction delays. But HBAM is expecting overall a strong year.

“There might be some issues with weather,” he said. “There are actually areas of the country, not Mississippi, where people are going in and buying houses as spec investments. They are not moving into them, but buy them to turn around and sell. Some builders are opposed to that, and are putting clauses in contracts that forbid that. But that is an indicator of how strong the market is in certain areas of the country.”

Bob McKay, executive vice president of Home Builders Association of Jackson, said the slight interest rate changes don’t seem to have had any impact on housing starts in the Jackson area.

“Starts are comparable to where they were last year, if not just a little ahead,” McKay said. “The market is extremely healthy, and I don’t see anything on the horizon right now to spoil that. One of the biggest problems in the metro area is keeping up with the demand for affordable housing. Of course, affordable housing always sells well. The middle market, from $210,000 to $260,000, is also doing really well. The high end is doing well in some markets, but it starts getting a little more difficult. You are narrowing down the buyers when you hit that $300,000 to $350,000 market and up.”

Big demand for labor

McKay said builders are staying extremely busy. And, there is a very high demand for labor right now.

“There is a lot of homebuilding activity statewide,” said Charley Green, vice president of the Coast HBAM. “Memphis and Tupelo are doing well, and the overflow from New Orleans is keeping Pearl River County busy. Hattiesburg is growing quickly, and Jackson County building is going real good. West Jackson County and around the Big Point and Vancleave areas in the northern part of the county building is very strong. Some of my friends in the supply business and concrete business say they have never seen the demand like it is. They are going great guns.”

New home construction is Pascagoula is very slow, Green said, but new home construction is steady elsewhere in Jackson County, as well as in Harrison and Hancock counties.

Green said high-end sales on the Gulf Coast are “on fire right now.”

“Condos on the Coast are sprouting up all over the place,” Green said. “I don’t understand the condo market. Project after project is being announced, and they are breaking ground, which means they have to sell out a number before start.

“Million-dollar sales on the Coast are no longer rare. We see them with more and more frequency. You have a lot of waterfront property here whose values are going out of sight. The homebuilding industry has been good the past few years.”
Green said the downside is that labor is a problem, especially for small builders, because the large builders have so much going on.

“It is a problem, and is going to continue to be a problem,” Green said. “Masonry is the hardest of the crafts to schedule, and has been for some time. We’re seeing more and more penetration into the market of Spanish-speaking workers. And we’re going to see more of that. Those guys have a great work ethic. They do a good job.”

Steady and stable

Shelley Schipke, Homebuilders Association of Northeast Mississippi, said home building in Tupelo has remained steady with much of the county seeing a lot of new home construction, but little activity inside the city.

“That is where the major activity is,” Schipke said. “Interest rates are supposed to stay pretty good, and that is going to keep people looking for a new home.”

As far as trend in new home construction, Schipke said one of the things she gets the most calls about is energy efficiency.

Milstead said other noteworthy trends in homebuilding include home automation and personal spaces for families such as libraries and theater rooms. With the technology where it is, home theater is becoming more and more prevalent in what people want in their homes, he said.

Contact MBJ contributing writer Becky Gillette at bgillette@bellsouth.net.

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