“Last year was a year in which interest rates skyrocketed relative to recent history and that put a lot of projects on hold,” said John Morris, HBA’s most recent executive director, in an interview before he stepped down last month to take a job in California. “That increased the cost of a lot of projects, and a lot of people stepped out of the market.”
Morris said this year will likely see two things happen: the easing of interest rates and people figuring out that waiting to buy a new home doesn’t save them anything because the cost of materials and the cost of labor continue to rise.
“While your interest rate may not be what you want it to be, your house is going to continue to get more expensive to build every year you wait,” Morris said.
Morris said areas that saw growth in recent years included Xenia and other parts of Greene County, including a few of the townships there, plus the areas around Brookville, Union Twp. and Huber Heights.
Most of 2023 for the bulk of Montgomery and Warren counties saw home building growth in the region “pretty much down or flat” compared to 2022, Morris said.
Miamisburg bucks trend
The exception to the rule, Morris said, is Miamisburg, which has been “unwavering in their commitment to embracing development.”
“Miamisburg controls its own water district, so things like tapping fees to tap into local water are extraordinarily low compared to Warren County, Greene County or Montgomery County, so it’s very enticing for a developer to come to Miamisburg,” he said. “Miamisburg ... has not shied away from redeveloping farmland and so the growth in Miamisburg has been tremendous.”
In 2022, permits for residential construction activity in Miamisburg numbered 60, totaling $18.9 million permit value, according to Miamisburg Development Director Chris Fine. In 2023, they increased to 74 and about $19.2 million in permit value.
Most of that activity was from two projects: Aberdeen, with homes by Fischer Homes, and Chamberlin Crossing, with homes by M/I Homes. Aberdeen includes 133 home sites while Chamberlin includes 117 home sites.
Credit: JIM NOELKER
Credit: JIM NOELKER
“As for construction activity moving through 2024 … it’s hard to say because it’s so dependent on the housing market, interest rates, and other factors,” Fine said. “But I would estimate we will build 60-plus new homes this year. Most of those will be in the Chamberlin Crossing development.”
Fairborn numbers down
Fairborn saw its typically healthy single-family home start numbers dip to 36 in 2023 from 65 in 2022, according to city officials.
City Planner Kathleen Riggs said residential lots in Fairborn provide “a variety of opportunities” for future homeowners.
“We’re supporting the expansion of our residential community, and the market seems to be supporting the product we have in the city,” Riggs said. “With each new development whether residential or commercial, we look at the impact of the entire community as a whole.”
The city wants to encourage a diverse housing product for new residents and its existing residents to age in place, she said. Over the last couple of years, the city has approved almost 500 additional residential units, Riggs said.
“Fortunately, we have been able to provide some of that product diversity with these recently approved residential developments that include a multi-family product for seniors, single family attached, and single-family detached homes,” Riggs said.
Huber Heights starts nearly halved
Huber Heights, another area that also has seen robust growth in recent years, also saw housing starts dip last year, going from 152 single family homes and 9 multi-family homes (multiplexes and apartments) in 2022 to 80 single-family homes and 2 multi-family homes in 2023, officials there said.
Residential growth over the last few years is helping drive new commercial and retail development and redevelopment within the community, according to Huber Heights City Planner Aaron Sorrell.
“A common desire we hear from residents is more diversity in dining options beyond QSR (quick-service restaurant) establishments,” Sorrell said. “It’s important to note that retail follows rooftops, so as additional housing units and households are added to the market, additional support for new retail and entertainment options is created.”
Additional housing also strengthens the city’s economic development opportunities, he said, noting that surveys nationwide show housing availability is one key component when companies are looking to locate or expand within a region.
“New housing is being absorbed in Huber Heights at a fast clip, which tells me the new products are filling market needs,” Sorrell said. “Developers are also building a variety of housing types, from single-family detached homes to medium density multi-family residential, increasing housing type diversity in the community.”
Sorrell said this year will be robust one for housing starts in Huber Heights.
“From a planning perspective, as the city continues to invest in itself, we expect to see developers and builders approach us about future opportunities for construction in 2025 and beyond,” he said.
What homebuilders are seeing
Charles Simms Development, which has been in Dayton since 1957, is working on multiple projects throughout the region, including The Gables of Huber Heights. Site work started there in September 2022 for the 74 market-rate home project with homes available now. The first phase of the project is expected to be completed by the end of 2025 and the second phase by a year or two after that, said co-owner Crosby Simms.
The new construction residential market has seen “a leveling out,” but some commodities remain high following the rise in cost that was seen in 2020-2022 due to high demand and supply chain issues.
“There are some things that continue to go up, and then there’s some things that just continue to go down,” Simms said. “I’m not sure if we’ll ever see what it cost back in 2020, but that’s something that we’re working towards.
“We’re starting to see more standard inflationary cost increases that had been seen in past years before 2020.”
Elizabeth Breitenstein, market president for Fischer Homes Dayton Division, said employment is “super strong” in the Dayton area, resulting in a great deal of investment coming into the region. That, in turn, has sparked the need for more homes. Fischer Homes is working to fill that need in numerous areas, including Miamisburg’s Aberdeen development, which is nearly complete.
Credit: JIM NOELKER
Credit: JIM NOELKER
She said governments and builders locally and nationwide are working to determine how the red tape involved with constructing a home can be reduced, which would include modifying zoning regulations.
“I don’t think any of us are requesting an abandoning of local zoning, it’s just that reducing complexities would help foster more development because the easier we make it to build, the more building that we can do.”
Space, permitting hurdles
While Morris said he believes the home building market will bounce back, the scarcity of land in the region remains an issue, along with local governments being unwilling to approach what the market wants to bear.
“People like denser properties. They like large homes on smaller lots. They want to have a nice quality of life in their home,” he said. “They don’t want to have to cut an acres worth of grass, so navigating your way through local zoning, and county regulations continues to be a burden and it slows down the process and increases the homebuyers cost for a product that they don’t necessarily get any benefit from.”
Morris said he does not believe that local governments were any less prohibitive in years past.
“I think it’s always been there, but now it is highlighted because of the increased cost of building a home and the lesser availability of developable lots,” he said. “So if more people need homes, and less land is available, and these onerous rules and regulations continue to add burden and reduced supply of land, it’s just a multiplier effect it all coming together.”
But Morris said that’s not based on one single factor or entity.
“I can’t point to one municipality and say, ‘It’s your fault.’ It’s been around a long time, but now it’s becoming very frustrating for the consumer, because they cannot build in the places where they want to build.”
Home improvements up
Montgomery County Auditor’s Office data suggests that while people may not have been building as many new homes last year, they were investing in existing properties.
Auditor’s office records show the number of parcels that increased in value because of new construction — ranging from a new building to the addition of a feature like a deck of garage — increased to 4,022 in 2023 from 1,764 in 2022.
This was largely driven by growth in Washington Twp., Dayton, Huber Heights, Kettering and Trotwood.
National trends
Meanwhile, national trends also have shown an increase in single-family home construction.
The National Association of Home Builders is projecting a roughly 4% increase in single-family starts this year as “mortgage rates settle lower, economic growth slows and inflation moves lower,” according to Robert Dietz, the NAHB’s chief economist.
Realtor.com, meanwhile, projects a more modest 0.4% increase.
Lawrence Yun, chief economist for the National Association of Realtors, forecasts that builders this year will break ground on 1.04 million single-family homes. That would be amount to a 13% increase from a projected 920,000 starts in 2023.
Reporting from the Associated Press was included in this report.
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