Declining demand for housing in Middle Tennessee has spurred the state's largest home builder to cut staff from its Murfreesboro-based operations, a move that many companies tied to the real estate market have already made, experts said Monday.
John Floyd, owner of Ole South Properties, said he put off the downsizing, which pares the staff size from 33 to 25, hoping new home orders would return to levels seen in the recent boom years.
Ole South had staff in place to build up to 700 homes a year, but with actual numbers likely to be in the high-500s this year, people "just didn't have anything to do," the owner said. Next year, Floyd is conservatively estimating between 300 and 400 new orders.
"We've held out and held out, thinking the tide would turn and that home building would pick back up," Floyd said. "But now it's apparent that it's not picking up and that next year won't be picking up either."
Real estate analyst Doug Timmons agrees that the Midstate housing market isn't likely to rebound to previous levels anytime soon, but says the job growth and population surge in Rutherford County puts local builders in a much better position than others across the country.
"The strength in the regional economy bodes well for us," the MTSU business and economics professor said. "Certainly, if you're going to be in a slow-down market, you want to be in a community like this."
Timmons said builders have outpaced demand by putting too many houses on the local market and now face a period of contraction. "That's the economic cycle, and that's just the way it is," he said.
Housing permits in Murfreesboro declined by 34.1 percent through September compared to the same period last year, according to city records. The county reported a similar declines of 16.8 percent with 634 total home permits compared to the 762 the previous year.
Still, nearly 1,000 new homes and condos have been built or are under construction in the Murfreesboro.
And even though demand is down, Murfreesboro Planning Director Joseph Aydelott said it's good to have housing available for companies looking to relocate because they need housing for their employees.
"It's good to have more than a year's supply (of housing) in any given time," said Aydelott.
Karyn Beaty, the executive officer for the Rutherford County Homebuilders Association, said her members aren't panicking, they're just repositioning themselves to unload excess inventory.
"Sales agents for builders are definitely becoming a bit more aggressive," Beaty said. "But everyone knows it's important that we avoid a wholesale dumping; no one wants to see the house values go down because that hurts the whole community."
"The strength in the regional economy bodes well for us. Certainly, if you're going to be in a slow-down market, you want to be in a community like this