An aftershock of the Great Recession is affecting Paulding County’s economy almost a decade later.
Some homebuilders in Paulding were increasingly being forced in 2019 to add development costs to the sales price to make the same amount of profit as they previously received — which likely increased the price to the buyer.
Builders generally had pre-developed building sites available since the economic downturn of the early 2010s but have mostly built on them, said city and county government building officials.
The trend led to building permits for new single-family homes taking a sharp nose dive in Dallas and decreasing for the first time in seven years in Hiram and unincorporated Paulding County, officials said.
Building permits for detached, single-family homes inside Dallas in 2019 decreased 78% from 2018’s total, the city government reported.
Meanwhile, permits for single-family construction in Hiram and unincorporated Paulding in 2019 decreased 12% from 2018 after increasing annually since 2012, according to information from the county’s Community Development department.
The city of Dallas — which issues building permits for work inside its corporate limits — saw its single-family permits drop from 161 valued at $28.5 million in 2018, to 35 valued at $8.5 million in 2019.
In the unincorporated county and Hiram, building permits for single-family homes decreased from 1,535 in 2018 to 1,348 in 2019.
Total value of single-family construction dropped from $164.6 million in 2018 (average cost $107,227), to $136.2 million in 2019 (average cost $101,057).
Some homebuilders — generally regional or national companies — often paid below-market prices for developed building lots offered by less-capitalized competitors after the housing industry “bubble” burst and helped trigger the Great Recession.
Builders bought about 10,000 lots in Paulding which already had been “platted” — approved in some form for construction — after their market values plummeted for their original developers, said Ann Lippmann, director of the county Community Development Department.
“Cheap lots that were on the ground are gone and people are having to develop from scratch,” Lippmann said in a recent report to the Paulding County Commission.
“The majority of those lots now have homes on them and the cost of a lot now includes full development costs,” she later told a reporter.
Micheal Cash, director of community development for the city of Dallas, agreed many developers took the same route to build inside the city after the recession and have exhausted their supply of pre-developed lots.
Lippmann estimated the average cost of a lot in Paulding now is more than $30,000.
HOUSING TRENDS IN 2019
Outside Dallas, the 2019 decrease in single-family permits followed a year in which they reached their highest level since the Great Recession.
Paulding County’s top year for single-family construction was 2005 when more than 3,400 permits were issued — after which single-family permits began decreasing annually before bottoming out at 124 permits in 2012.
They then began annual increases through 2018 when 1,535 were recorded.
Other trends from 2019 that Lippmann and Cash noted in recent reports:
♦ Six out of 10 new homes in Paulding in the last 10 years have been permitted in the unincorporated county north of U.S. Hwy. 278 and west of Dallas-Acworth Highway.
However, the trend shifted slightly in 2019 after only half of new homes were built in the same north Paulding area and eastern Paulding saw a larger than usual share, Lippmann said.
♦ The top communities in 2019 for new residential construction outside Dallas were all in northeastern or eastern parts of the county.
They included Seven Hills/Naturewalk off Seven Hills Boulevard; Barrett Chase off Rakestraw Mill Road; Macland Township off Macland Road; The Reserve at Timberlands off Dallas-Acworth Highway; and Victoria Heights off Ivey Gulledge Road.
Seven Hills/Naturewalk routinely has been the top area for new construction in Paulding for many years, Lippmann said.
♦ The top homebuilders in Paulding and Hiram in 2019 according to number of permits were Texas-based D.R. Horton Inc., Atlanta-based Resibuilt Homes LLC; Woodstock-based Piedmont Residential LLC and SDC Gwinnett LLC; Colorado-based CCG Constructors LLC; and Paulding County-based Keystone Communities LLC.
♦ The dominant builder in Dallas in 2019 was Piedmont Residential in the Vista Lake subdivision off U.S. Hwy. 278, Cash said.
Cash said new subdivisions in Dallas are in various stages of development but will take some time to complete — meaning single-family construction may take a few years to return to post-recession levels which peaked in 2017.
Mark Taglieber, co-owner of Keystone Communities, said he believed “we will see a modest amount of new construction growth over the coming years.”
“Any growth seen will likely be attributed to the larger builders and some of the new developments they are working on,” he said.
He said the supply of developed residential lots in Paulding is “limited” and “will require more land development in the coming years.”
“Right now, the only companies developing lots are larger builders,” he said. “I see smaller builders like Keystone Communities undertaking some residential development — however, it will be smaller projects.”
Taglieber said other area builders have “indicated development costs are definitely an issue all across Metro Atlanta” with some attributing it to increased material costs and government regulations.
However, he said he did not foresee new housing construction being limited by access to construction financing or a lack of buyers if the economy continues to grow and unemployment remains low “as they have over the last couple years,” Taglieber said.