New home permits soar 61%

New home building activity in the Denver area rose 61.2 percent in February compared with February 2012, continuing a trend that is approaching a two-year mark, according to a study released today by the Home Builders Association of Metro Denver.

“If we get to April and we do it again, it will have been two years,” of consecutive month increases from the same month in the previous year, said Jeff Whiton, president of the local trade organization.

This 5-bedroom, 5-bathroom, new homes in Parker is on the market for $849,500.

The HBA tracks building permits issued in Adams, Boulder, Broomfield, Denver, Douglas, Elbert, and Jefferson counties, as well as every municipality within each county. Building permits track future starts.

“The market is improving,” Whiton said.

The report shows that there were 490 permits issued for single-family detached homes in February, compared with 304 in February 2012.

In the first two months of this year, there were 967 permits issued for homes, a 58.4 percent jump from the 623 permits issued in the first two months of last year.

During the Great Recession, when the new housing market fell to the lowest levels on record, new homes accounted for only about 10 percent of all homes sold in the area, Whiton said.

Given the historically low inventory levels of resales on the market, new homes should account for a much bigger percentage of the overall market, Whiton said.

“The market share for new homes is climbing,” Whiton said. “It has been as high as about 20 percent and I think this year it will be at least in the low teens.”

Many more Realtors are focusing on selling new homes, rather than resales, he said.

“There has been a big market shift,” Whiton said. “Not only is there this huge shortage of resales, it is just easier to sell a new home than a resale. A new home is a much better product. Builders just make it easier to buy a new home. They build a better product. They are more energy-efficient and fresh. They can often be customized to the way the consumer wants it.”
 However, builders may not be able to construct enough homes quickly enough to meet demand, he said.

“The existing supply of lots that are ready for building being absorbed quickly,” Whiton said. “Builders are looking for new lots.”

He said new homes prices are beginning to rise. During the tough times, builders weren’t able to charge consumers for things such as lot premiums, but they are today, he said.

“The market dictates what the price levels can be,” Whiton said. “Now, if homes with unique features, such as great views or next to a park or on a golf course, or near a good school, customers are bidding up those prices.”

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