Building housing bridges and barriers

Permitting changes play big role in this year’s booms, busts

Thursday, Nov. 10, 2005

Click here to enlarge this photo Laurie DeWitt⁄The Gazette Centex Homes’ development near the Suitland Metro station is one of many projects in Prince George’s County, which has seen single-family home permits go up by half in 2005.

Permits issued for new single-family homes have risen more than 50 percent in Prince George’s in the first nine months of 2005 from a year ago, according to U.S. Census Bureau figures. Meanwhile, they have declined in Montgomery by more than 20 percent. At this time last year, Montgomery had issued about 400 more permits for single-family homes than Prince George’s. This year, Prince George’s is ahead by more than 700.

Permits have also declined in Frederick by 11.4 percent, but they are up in Carroll by 9.6 percent.

The availability of more open land and a better, more streamlined permitting process have played large roles in that trend, homebuilders say.

‘‘The permitting and plan approval process has been positive in Prince George’s,” said Ronny Salameh, Maryland division manager of the Washington, D.C., region for Centex, headquartered in Dallas. ‘‘Montgomery County has been the bread and butter for us, and we continue to build there. But it’s had its share of delays this past year. The permitting process has been more stringent.”

The trend is helping Prince George’s shed a negative image that some people have about the county, said Del. Carolyn J.B. Howard (D-Dist. 24) of Mitchellville. ‘‘Now, there are million-dollar homes and affordable homes being built,” she said. ‘‘We now call it ‘Gorgeous Prince George’s.’”

In Montgomery, building slowed earlier this year as the county implemented a freeze of building permits in new subdivisions in Clarksburg in response to alleged homebuilding violations related to height and setback limits.

The decline in permits being issued in Montgomery is related to that freeze and the more intense scrutiny being given to permit applications for new homes, said Susan J. Matlick, executive vice president of the Maryland-National Capital Building Industry Association, a Silver Spring industry organization.

‘‘It has resulted in a slower permitting process in Montgomery County,” Matlick said. ‘‘We’re concerned that there will be a significant delay in delivering the houses that people have purchased.”

Montgomery County has more townhome and condominium construction going on, which is what normally occurs in a highly developed area that does not have the land for as much single-family housing, said real estate analyst Kenneth R.C. Wenhold, Washington regional director for Metrostudy, a Houston housing market data company.

‘‘They are nice, quality condominiums and townhomes,” Wenhold said. ‘‘Still, the county is still not adding enough housing to accommodate the population growth.”

Through September, 1,703 multi-family housing units had been authorized for construction in Montgomery this year, an increase of 85 percent over a year ago, according to the Census Bureau.

Suburban Maryland, which stretches from Frederick to St. Mary’s counties, has one of the tightest new-home supplies of any major market in the nation, Wenhold said. The roughly five-month supply in 2005’s first quarter was about half the total of Northern Virginia.

In such tight markets, ‘‘smart growth” policies, such as incorporating natural elements such as streams into the development, can make a big difference in utilizing the available land, Wenhold said.

Affordable housinga big issue

Median home sales prices climbed dramatically in Maryland between 2002 and 2004, including a 63 percent leap in Queen Anne’s County to $299,900, according to the state planning department. In Montgomery, the median price rose 29 percent to $465,000. Prince George’s saw a 36 percent hike to $250,000. Frederick’s median jumped 37 percent to $329,000.

While that may not be good news for first-time homebuyers, each $1,000 gain from a home sale increases consumer spending by as much as $150, compared with as much as $50 for a similar stock market gain, according to the Maryland Association of Realtors. Last year, there were almost 98,000 new and used homes sold in the state, with an average price of about $269,000, a 20 percent increase from 2003.

A home affordability index produced by the state Realtors group showed that the typical first-time homebuyer in Maryland had less than half of the income needed to buy an average starter home valued at $257,405.

‘‘We continue to be concerned about the ability of families to buy their first home,” Maryland Association of Realtors President Alan Ingraham said in a statement. ‘‘August’s effective interest rate is the highest it has been all year, and if rates continue to rise, even more families will find their first homes out of reach financially.”

Some Realtors report in company newsletters that overall housing inventory in Montgomery is rising, and it’s becoming a better market for buyers. Homes took slightly longer to sell in October than the average 27 days they were on the market in September, they said. Homes are also taking longer to sell in Prince George’s and Frederick counties than they did several months ago, Realtors said.

Developers of projects with more than 50 homes in areas of Montgomery County that are not annexed into municipalities are required to commit between 12.5 percent and 15 percent of the units to be affordable housing. Those are available to buyers who earn between 50 percent and 70 percent of the median annual income, which was $82,971 in the county last year.

Public entities must give incentives, including financial ones and zoning variances, to developers to make affordable housing worth their investment, Wenhold said. ‘‘Building materials are more expensive than last year. And when there is not enough supply as it is, that also makes it hard to lower prices,” he said.

Staff Writer Steve Berberich contributed to this report, which originally appeared in The Business Gazette.