When growing concern about the potential effects of the COVID-19 pandemic on the housing market caused builder confidence to plunge 42 points in April to 30, it was the largest single monthly change in the history of the National Association of Homebuilders/Wells Fargo Housing Market Index and marked the lowest builder confidence reading since June 2012. (See “Builder Confidence Posts Historic Decline on Coronavirus Pandemic” on nahbnow.com.)
Derived from a monthly survey NAHB has been conducting for 30 years, the HMI gauges builder perceptions of current single-family home sales and sales expectations for the next six months as “good,” “fair or “poor.”
Eight months later, veteran Chattanooga homebuilder Jay Bell says the local market is “all good,” confirming the prediction of a June 2020 Washington Post article about an expected uptick in the home construction market late this year.
Although the home construction market has been well below pre-pandemic levels, The Washington Post article reports, Bell says his company has had a normal year – despite the challenges COVID-19 has posed.
Bell discusses these challenges and his expectations for 2021 in this interview with the Hamilton County Herald.
What challenges is Bell Homebuilders experiencing as a result of the pandemic?
“We’re experiencing supply chain issues with materials and parts for the houses. For example, there have been shortages on HVAC units because a lot of the parts were coming from China or factories where there were shut down for a period of time. We’ve also had shortages in roofing and lumber. Everything material that goes into a house has been affected in some way.’’
Has Bell Homebuilders missed any deadlines as a result?
“A few, but we adjusted to make sure we get materials on time. For instance, we’re ordering appliances four to eight weeks in advance to make sure we have them for a new home. It used to be a week. We’ve also been able to substitute certain products in order to complete houses on time.’’
Lumber prices have risen dramatically. Has this affected the cost of your homes?
“Lumber has gone up 30-50% during the pandemic, and no one really knows why. That’s been a significant factor in the cost of new homes.’’
Have you raised the prices to cover the difference?
“Appraisal issues make it hard to increase the cost of a house fast enough to match a rise in the cost of the lumber. A house will appraise for only so much, so it has squeezed our profits. We could raise the price, but we probably wouldn’t get it. It takes time for the market to adjust to price shocks.’’
Despite all of that, the Chattanooga housing market is strong.
“Our sales have been very strong. Our team’s Realtor, Kaye [Ivey], is selling our homes as quickly as we can finish them.’’
How many homes will you build in 2020?
“We normally build between 50-80 houses a year. We’ll probably build about 75 houses this year. I’m developing land in all of my subdivisions. We’re expanding Hamilton on Hunter in Ooltewah, Belleau Ridge in Ooltewah, Sedman Hills in Hixson and Stonewall Farms in Hixson. We’re confident the market is going to remain strong.’’
Can Bell Homebuilders keep up this pace? Land is becoming scarce in Hamilton County.
“Good land is becoming harder and harder to find. When I say good land, I mean land that has all the things you need in order to develop it. It needs to be relatively flat, it needs to be accessible to water and power, and you need to be able to develop it in an affordable manner. That’s very difficult to find right now. There are very few lots of the market.’’
Your dad, Julian Bell, started Bell Homebuilders in 1976. Did he teach you how to handle ups and downs in the home construction industry?
“I learned a lot from my dad. He went through many ups and downs. Unfortunately, he passed away during the Great Recession, so although he didn’t get to see us come out of that, he positioned the company to survive.’’
It sounds like Bell Homebuilders is weathering the current storm, as well. What are your plans for 2021?
“I’m looking forward to getting people back to our office and seeing them on a daily basis. We haven’t been to the office in six months. Everyone has been working remotely since March. Luckily, everybody knows their job well.’’
Do you think you’ll be able to build another 50-80 houses next year?
“We’re planning to. I don’t see any reason why we won’t. We have plenty of land left in our subdivisions, so we’re going to keep building roads and houses. I firmly believe Hamilton County is on a good course for our industry.’’