Columbia housing market slim for first-time homebuyers

As the nation’s economy recovers, many people are looking to buy a home or upgrade to a larger home. But many of those people are faced with limited choices of existing homes or the high cost of building their own home.

“We did have a slowdown in the building industry,” said John Jordan, general manger of Lifestyle Homes. “So there’s people that have started to come out and buy now and the demand is really picking up, especially first time home-buyers.”

Jordan’s company is developing homes in two subdivisions in Columbia — the Old Hawthorne neighborhood off East Broadway and Arbor Pointe in Northeast Columbia.

“We’re starting to see people who maybe have not ever built a house, buying new houses or people are starting to upgrade again,” Jordan said.

ABC 17 News took a look at single-family residential permit numbers for Boone County from 2000 through 2016. 2004 saw the highest number of permits with 378. Four years later in 2008, the county had only 124 permit requests. The number of permits has been rising since 2008.

“For a new-construction house to sell, someone has to move into town because normally a existing residence is sold,” Jordan said. “So that is a positive thing. If you’re not growing, you’re dying. So we’re obviously seeing growth.”

John Sebree with the Missouri Realtors Association said homes in Missouri have spent less and less time on the market, ending 2016 with an average of 110 days on the market.

“That is probably an indication there is not enough inventory out there so we will probably see the days on market continue to fall,” Sebree said. “There really are not enough homes on the market. Not just in Missouri but across the country.”

Part of the formula raising prices for people who decide to build homes is the lack of labor. According to developers, there are far fewer “brick-layers” now than there were before the recession.

“I think what we saw were a lot of people that were in the building trades business actually left the business,” Jordan said. “They went and sought work at other places and since the demand has come back, there is not as much labor out there to actually do the construction. That is part of the process, it’s taking a little bit longer to build houses than it did back in the heyday.”

Andrew Kummerfeld is the owner of Kummerfeld Homes in Columbia. He is also the vice president for the Columbia Home Builders Association. His team has been building homes in Columbia for about five years. Kummerfeld agrees that a lack of laborers has increased the price of homebuilding.

“Right now you’re seeing less and less skilled labor available for subcontractors,” Kummerfeld said. “The average age of subcontractors is about 47 years old. So with less available labor, it’s taking longer to build a home, causing the inventory to come down.”

Some people in the industry believe the lack of laborers is due to the increased emphasis on the need for a college degree instead of training students in different trade industries.

“I think right now you are seeing more kids going to college rather than becoming an electrician or a plumber or a trim carpenter,” Kummerfeld said. “But the reality is if you are honest and professional and willing to work hard, right now you could probably make $75,000 to $100,000 a year. So if we can maybe partner with the career center and educate kids to the opportunities that are out there, and this is a national issue, but really in Columbia because we have historic unemployment, if we can let these kids know the opportunity available, I think we can bring more labor into the supply of available labor and that will really help bring down the cost of homes in the future.”

The cost of land has also risen, immediately raising prices for homebuyers looking to build.

“The cost of lots have increased in the last two years by about 40 percent,” according to Kummerfeld.

In Columbia specifically, Kummerfeld said the cost of land in conjunction with a land scarcity has increased local starter homes to the $200,000 or more price range.

“There is less land close to town that is available to develop,” Kummerfeld said. “Coupled with regulations, I think that is going to equal a more expensive lot. And when that is your largest cost of building a house, it’s going to be mean your home is going to become less affordable.”

Lower interest rates are one bright spot developers believe are bringing people into homebuying despite rising costs.

“It is still very affordable for people to buy houses,” Jordan said. “They may not have been able to buy as much of a house as they used to be able to buy starting out.”

Sebree said he’s confident the industry will continue to grow and recover in 2017.

“I think if we can see a little bit more homebuilding and those who have been on the fence start putting their homes on the market, they’re going to find a public willing to buy,” Sebree said.