We are frequently asked, “So what’s going on with new construction in the Smokies, particularly with cabins?”
Oh my goodness – what a question! As many of you know, we have been involved in bringing back new construction to our Great Smoky Mountains for the last two to three years. Through our partnership with developers in Sherwood Forest Resort, we have overseen the construction of dozens of new cabins there. More recently, I shared plans to create additional new resorts in our region. The work has been slow going but extremely rewarding, and we are excited for the future as more cabin construction takes place in those resort locations.
In a nutshell, new construction is continuing to make its way forward. The values of existing properties are escalating to the point that they are close to intersecting with the price of building based on average price per square foot. That is exciting for the contractor, the developer and for you and me! It’s still not easy and market prices are advancing slowly, but progress is being made.
Of course, the loss of hundreds of cabins and homes in and around Gatlinburg has affected new construction in several different ways. As you can imagine, there has been a huge interest in building back destroyed structures. Home owners and cabin owners are looking to replace what they lost in the fire and in some cases are in a bit of a scramble to locate a plan, find a contractor and tie down some material to build back. However, it is not a straight forward process. Building permits are required and there may be new building codes that weren’t in effect when the original structure on the property was built. Owners have so many new issues to consider as they work on a plan to rebuild. For example, the foundations have to be assessed for stability. Can they be reused, or must they be demolished and cleared away before new construction can begin? Do we have adequate utilities? Are the septic or sewer lines still in place? What about the water lines or the well head? What is the resort or neighborhood going to look like in the next few years? These are just a few of the items owners are dealing with, and as a result rebuilding may not be a feasible option. There are many who have decided to not pursue rebuilding but have already replaced their properties with a home in another location. Some have simply decided to wait and see how things go before wading into the decision to rebuild.
Ultimately, I believe there will be several outcomes. One result will be a boost to building. Subcontractors are being attracted back to the area. Those who had laid down the hammer and now work at places like Dollywood may return to the profession. This will create more activity and building opportunities for those who want a newly constructed home or cabin. Along with new construction, we are also going to see a facelift to some areas that were becoming a bit tired as properties had aged. Historic and areas that were well loved like Chalet Village in Gatlinburg will have new life as home owners build new chalets and cabins on property. We are still trying to see the bright side of what was a very dark day. Actually one of those positives is that views that had been lost to thick trees now have outstanding vista views as nature pruned itself.
A side note that many of us didn’t realize is that nature actually needs fires from time to time. It provides and enrichment to the soil, natures fertilizer. There are even seeds that only are activated by fire. You can see it already in the regrowth along the side of the National Park roads as the green growth returns. It looks like a St. Patrick’s Day parade of lime green color!
In the short run, the fires will cause market prices to further increase. The number of residential properties for sale in the Great Smoky Mountains was already a bit down even before the fires. Now it is down even more with the new influx of cabin buyers looking to replace lost properties. Many of them are visiting properties with an insurance check in hand, so they might be willing to be a little more competitive with their offers.
A third result we will see is difficulty in attracting contractors to individual projects as they are in high demand and probably will have more than enough work to keep them very busy for the foreseeable future. However we have been contacted by contractors just outside of our area willing to travel an hour or so to work. I think it will take more perseverance to find a quality, knowledgeable contractor but it will be possible. Feel free to ask for our help as we work our way through the contractors; we can send you in the right direction at least with the right questions!
We have also seen lending open up to new construction. When I started 3 years ago representing builders and developers we could hardly talk anyone into giving us money for logs and nails – but now every month I am being approached by a new lender who is putting their toe in the new construction loan waters. That is really good news. The required minimum down payments amounts are being relaxed. Right now, you can build a residential home for as little as five percent down, and you can use your lot as a down payment. The lending terms on an investment cabin come with a 20 percent down payment requirement for the construction loan.
So if you’ve ever thought of building your perfect home, this is the time to start dreaming with those cabin plan books or house plan books! Construction is back to stay for a good long while! Over the next year, lots of us are going to learn to build again and how to understand new construction… not a bad thing if you are like me, and love construction projects.
