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Top-end homes keep coming; construction in $600,000-plus range holds steady in LR.

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THE NUMBER OF BIG-HOME PROJECTS in Little Rock increased slightly in 2007, along with the average size and value of large residential permits.

Thirty-two building permits involving houses valued at $600,000 or more were filed for the year, compared with 30 in 2006.

In a year-to-year comparison, the average price and size of the top 30 permits in 2007 topped $958,000 at about 7,700 SF. In 2006, the averages were $909,000 and about 7,300 SF.

Little Rock's building permit is linked to square feet under roof, meaning literal space under roof, which includes covered porches, garages, etc. This is in contrast to heated and cooled SF, typically referred to as living area, the more common measuring stick for home size.

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The total value of the top 30 building permits topped $28.7 million last year. That number was about $27.3 million in 2006.

The biggest permit, $4 million and 11,800 SF, is attached to a new home going up near the Country Club of Little Rock. The construction site is the future home of James East, former chairman of Pulaski Bank & Trust and now largest shareholder in Iberia Bank Corp.

Jack Hartsell Construction started four big-home projects in 2007, including the three most expensive. "I've been fortunate because I'm busy," Jack Hartsell said. The company has built custom homes in the Little Rock market for 40 years, dating back to when $250,000 was considered an upscale home.

Hartsell reports that business is fine at the top end of the residential market, but he has concerns about how builders are faring with the less pricey homes.

"I'm getting calls from carpenters looking for work, and that bothers me because that means other companies aren't doing as much business," Hartsell said.

Kevin Hannah Construction also tallied four building permits of $600,000-plus in 2007. "I would just say the upper-end market is still strong because no one seems to be backing off," Kevin Hannah said.

He reports that construction costs and interest rates are favorable and that traffic from interested buyers hasn't slowed down. His company has five pre-sold and two spec projects in motion.

"For my market, it's been good," said Hannah, who has built large homes for a decade. "We have made our living on homes between $800,000 and $1.25 million. That's our bread and butter."

According to Hannah, the closest thing to a dampening effect on high-end residential construction is a skittish mood among would-be buyers of $400,000 to $550,000 homes.

That sometimes translates into longer marketing times for owners looking to sell houses in that price range and move into $800,000-plus homes.

"There are as many people wanting new [top-end] homes now as there have ever been," Hannah said. "A lot of people will start construction on their $900,000 home, but it may take longer for someone to step in and buy their old home."

Hannah said opportunities for successful upscale spec homes remain, but a builder can expect trouble moving a big red brick box with no character.

"You can still build an $800,000 spec house, but you have to put some things in it that sets it apart such as a courtyard, fountain or other features," he said. "You have to come up with extras to make it work."

Twenty-one of the 32 residential projects on the building permit list are spread across various Chenal Valley neighborhoods. Five are in Orle, with four each in Germay and Sologne and three each in The Arbors and Deauville Place. The other two are on Mornay Lane and Sezanne Court.

The 32 largest residential permits are divided among 22 different builders. M.J. Herr and Carl Henson accounted for three entries each.

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By George Waldon

george@abpg.com
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Title Annotation:Upscale Real Estate
Author:Waldon, George
Publication:Arkansas Business
Date:Jan 7, 2008
Words:640
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