As a prominent local homebuilder put it, 2014 was an odd year for the Richmond-area homebuilding market.
Despite a largely positive 2013, when nearly all area homebuilders reported more homes built and sold than the year before, 2014’s numbers were more of a mixed bag; several top builders reported drops in construction as well as in sales.
Annual lists compiled by Richmond BizSense show the number of homes built last year by 30 reporting firms totaled 1,900. The year before, 47 firms reported a total of 2,065 new homes built.
The top eight builders for those years reported a total of 1,570 homes built in 2014, compared to 1,636 homes in 2013 – a decrease of 4 percent. The ninth-highest builder in 2014, CVA Builders, was not listed in the 2013 ranking.
Last year’s 30 reporting firms tallied 1,775 sales, compared with the previous year’s 47-firm total of 1,949. The top eight firms reported 1,512 homes sold last year, compared to 1,533 in 2013 – a difference of 1 percent.
Top builder and seller both years, Ryan Homes, built 67 more homes in 2014 than 2013 for a total of 671, increasing its productivity by 11 percent. The Richmond-based company also sold 671 houses last year.
And HHHunt Homes, which placed second last year in new home construction, built 26 more homes than in 2013 for a total of 216, all of them sold.
But such upward trends were not seen by everyone.
Eagle Construction of VA, the third-highest builder last year, built 197 houses in 2014, a big jump down from 303 in 2013. And the company sold 135 homes, down from 261 in 2013.
The numbers flipped Eagle’s results from the previous two-year period between 2012 and 2013, when it increased construction by 110 homes – from 193 to 303 – and home sales by 118 – up to 261.
Last year’s fourth-place builder, Main Street Homes, built 175 houses in 2014 and sold 182. Those numbers are just below its 2013 stats, when the Midlothian-based builder constructed 187 homes and sold 189.
Rounding out last year’s top eight were StyleCraft Homes, Liberty Homes Inc., R-CI Builders and Boone Homes. All of those firms except for R-CI Builders made the top eight in 2013, as well.
Vernon McClure, owner of Main Street Homes and a former president of the Home Building Association of Richmond (HBAR), said in a recent interview the mix of results for 2014 came as a surprise.
“2014 was a little bit of an odd year,” he said, “because the whole market overall was down from 2013. We really hadn’t expected that, but it was probably down 7 percent or something like that over the previous year. 2013 had been pretty hot.”
McClure attributed last year’s slump to several factors, such as building material costs affecting new home prices, the Ebola scare, tensions in Russia and Syria affecting consumer confidence and the impact of harsh winter storms.
“That definitely keeps people from coming out to look at new homes. This January, even with the weather, we’ve seen better traffic,” he said.
McClure said he expects that momentum to continue through 2015, predicting this year will see numbers comparable to two years ago.
“We’re looking for this year to be back to a 2013 level,” he said. “I think the market overall, what we’re looking at is maybe up 15 percent.”
McClure said the market is still recovering from the economic downturn.
“It’s really kind of amazing, because we’re still, as a market, only about 50 percent of what we used to do in ’05-06,” he said. “So it’s still only halfway back. It fell a long way: 75 percent.”
Between 2005 and 2006 was when the local housing market peaked, with 5,756 homes sold in 2006 and 6,332 building permits issued in 2005.
A recent semi-annual report by the HBAR stated the Richmond area remains “far from an optimal market,” noting new home construction in 2014 totaled only 45 percent of the number of homes built in a normal or pre-boom market.
“This difficulty can be attributed to a number of factors, including higher costs, increased regulations, and uncertain economic conditions,” the report states. It goes on to say that improvements in the new housing sector are expected in 2015, “but a full rebound remains elusive.”
The report also found the average price of a new home sold in the Richmond area increased by nearly $24,000 up to $365,352 in 2014. The report defined that area as including the city of Richmond and Caroline, Chesterfield, Goochland, Hanover, Henrico, New Kent and Powhatan counties.
Chesterfield County had the largest market share – 40 percent – for new home sales, but the number of sales dropped 4 percent compared to 2013.
And Chesterfield issued the most multifamily building permits of any other jurisdiction – a first for the county since 2008. The report also noted Henrico County issued just one multifamily permit last year.
Condominiums and townhouses accounted for 23 percent of all new homes sold – a 4 percent drop from 2013 and, according to the report, the lowest level since before 2006.