I’m still waiting for the boom to come. Yes, those were the last words I remember saying before waking up on July 5 with a head bandage and a patriotic ringing of the ears. But what I’m talking about this morning is a Lawrence boom in single-family housing construction.
New numbers are out for home construction in Lawrence, and they show that the Lawrence home-building scene is quite a bit different from what is happening in the Kansas City market. Through July, Lawrence builders have received permits to build 105 single-family or duplex homes in 2016. That’s a good number compared with the post-recession doldrums of 2009-2012. But the number is not so good compared with last year. Thus far in 2016, single-family and duplex construction is off 30 percent compared with the same period a year ago.
What’s more interesting is what is going on in Kansas City. Single-family home construction in Kansas City actually is booming. The Home Builders Association of Greater Kansas City hasn’t yet released its July report, but through June the numbers are impressive. Single-family construction in the KC metro is up 29 percent compared with the same period a year ago. (If you are wanting to compare apples to apples, Lawrence single-family home construction at the June mark was down about 34 percent.)
Home building is an important economic activity in Lawrence, but for whatever reason it has had a hard time sustaining any momentum recently. Compare that with the Kansas City market, which is in its fifth straight year of increases for single-family home construction.
Perhaps the most interesting difference between the Lawrence and Kansas City markets has to do with apartments. The construction of apartments in Lawrence has been much more robust than single-family construction. In fact, it has become almost routine for the number of apartment units built in Lawrence to exceed the number of single-family and duplex units built in the city. That didn’t used to be the case, but now the numbers most years aren’t even close.
It is not hard to find national stories about how more Americans are choosing to live in apartments rather than single-family homes. There is a generation of Americans who don’t like the idea of owning and maintaining a property as much as their parents did. Plus, as the number of retirees rise, more of them are seeking to get away from some of the responsibilities of home ownership. But the trend is particularly pronounced in Lawrence.
Since 2009, Lawrence every single year has built more apartment units than single-family or duplex units. Contrast that to Kansas City: In the eight-county area that comprises the KC metro market, single-family home construction has exceeded apartment construction every single year.
Here are some numbers to put in perspective just how different the Lawrence market has become: From 2009 through June of 2016, about 33 percent of all new residential construction in Lawrence was single-family or duplex homes, while 67 percent was apartments or other multifamily units. During the same time period in the KC metro, 61 percent of all residential construction was single-family, while 39 percent was apartments.
Don’t get me wrong, I’m not saying what is happening in Lawrence is bad. More apartment construction theoretically means we’re becoming a denser community, which is one of the strategies to fight urban sprawl. But since apartments are generally always rentals, it also means that the ownership of our community is becoming more concentrated too. That probably has implications.
Regardless, we long have said Lawrence should be different from Kansas City. These numbers show that’s the case. Kansas City residents are the ones with yards.
Here’s a look at other numbers from Lawrence’s July building permit report:
• Thus far in 2016, the city has issued permits for 105 single-family or duplex homes. That’s down from 152 units in 2015, but is still better than the seven-year average of 86 units.
• The city year-to-date has issued permits for 377 apartment units. That’s down from 431 units in 2015. But don’t kid yourself, this is still a very good year for apartment construction. The seven-year average is 188 units.
• The city thus far has issued permits for $126.8 million worth of construction in Lawrence. That’s down from $167.6 million at this point in 2015. But remember, 2015 went on to be a record-setting year. The seven-year average is about $78 million.
The builders are back — at least for the moment.
The latest construction report from Lawrence City Hall shows that both single family and apartment construction are at their highest levels in at least five years. To top it off, commercial construction — led by public projects such as the library expansion and the public/private Rock Chalk Park development — also are at highs not seen in years.
Lawrence builders in May pulled permits for 15 single family homes. For the year, city officials have issued permits for 74 single family or duplex homes. That’s a 51 percent increase over the 49 homes underway at this time last year. It also tops the previous five-year high of 70 homes in 2010.
I’m sure builders are watching with much interest how the housing market responds to slightly rising mortgage rates. My understanding is rates have topped the 4 percent level, which has caused worries about whether the housing market will sustain its recovery. Who would have thought 10 years ago that 4 percent interest rates would have ever created any type of worry, other than perhaps concern that the champagne shipments couldn’t keep pace with the parties.
The city didn’t issue any permits for new apartment construction in May, but for the year, the market continues to be very active. The city has issued permits for 374 apartment units, a new five-year high and a 103 percent increase from this time last year.
The numbers really get eye-popping when you add commercial construction into the fold. City officials issued a $9.9 million building permit for work on the library portion of the Lawrence Public Library project. A permit for the parking garage portion already had been issued late last year.
For the month of May, the city issued permits for about $16.1 million worth of projects. For the year thus far, builders have started $70.9 million worth of construction. That’s up 71 percent from the $41.4 million worth of project underway at this time last year.
Granted, about $16 million worth of the projects are government or university-fueled projects — $9.9 million for the library and $6 million and counting for Rock Chalk Park — but they are employing builders all the same. And several commercial, private-enterprise projects have been started in Lawrence as well. That continued in May. City officials issued a $1.2 million permit to the Dillons Store at 3000 W. Sixth Street this month. As we reported in November, Dillons filed plans to add a new drive-thru pharmacy lane to the store, at Sixth and Lawrence Avenue. My understanding is that some other interior renovations and landscaping improvements will occur at the store as well, but the overall size of the approximately 60,000 square foot store won’t change. When I get more information about the renovations, I’ll update you with a separate post.
There are other signs in Lawrence that the building economy is starting to pick back up. Two businesses that rely heavily on construction are in the expansion mode.
The first is Pulaski Bank. The bank is headquartered in St. Louis, but has a significant mortgage lending operation in Overland Park and Johnson County. Well, it has now expanded into Lawrence.
The company has opened offices at 3210 Mesa Way, behind the former Lawrence Athletic Club. The banking operations in Lawrence will focus exclusively on home lending. Longtime Lawrence mortgage lender Chris Forbes is running the Lawrence operations for Pulaski. The company currently has two employees at its Lawrence branch, but is adding a third in the next couple of weeks, and hopes to eventually grow to four.
The second is Midway Wholesale at 2711 Oregon Street. The building supply company is adding about 3,000 square feet. Branch manager Joel Dickey said the expansion is designed to give the business better showroom space and more offices.
The business sells a variety of exterior building products, so we’re talking things like roofing, siding, guttering, masonry products and the tools needed to tackle such jobs.
Even though the company’s name highlights the wholesale nature of the business, it doesn’t limit its sales to contractors. Dickey said selling to homeowners has become a larger part of the business. But a Menards or Home Depot it is not. Its business model is different, relying more on customers ordering what they need from the business, rather than picking it up right that minute.
But the company’s Lawrence expansion is a sign that things are on the upswing in the local market, Dickey said.
“It is improving,” Dickey said. “It is not anything like it used to be, but you can see a change coming.”