New home permits rise 56%
Denver-area home builders started out the year on a strong note, as they struggle to meet consumer demands for new houses in a market with a record-low inventory of resale homes.
In January, builders pulled 497 permits for homes, a 55.8 percent increase from the 319 permits issued in January 2012, according to a report by the HBA of Metro Denver.
Brookfield Homes is having great success with its Midtown community, minutes from the more expensive Highland.
The report covers the counties of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Elbert and Jefferson, as well as every municipality in every county.
“January was the 22nd consecutive month that showed an increase from the same month in the previous year,” said Jeff Whiton, CEO of the HBA of Metro Denver.
The report also showed that single-family attached permits rose by 66 percent to 83 from 50 and apartment permits rose a whopping 345 percent to 276 from 62. In total, for all product types, there were 864 permits issued in January, a 100.5 percent increase from January 2012.
Permits are a sign of future construction.
Whiton said that while 2013 may show huge percentage increase in permit from 2012, as 2012 did from 2011, housing activity will still be far off its historic norm of about 15,000 housing starts annually.
“Let’s say we do 8,500 homes this year,” Whiton said. “That is about half of the 15,000 we do in a traditional year and a long way from a booming housing market,” when builders pull about 30,000 permits.
Still, an improving housing market benefits the entire economy, and not just those directly involved in the industry, he emphasized.
“I think that a strong case can be made is that the residential construction economy is one of the biggest economic engines of the economy,” Whiton said.
“Every new home built will provide well over $30,000 from permits and other fees to local communities. And, on average, every home that is build creates the equivalent of a little over three permanent, full-time jobs.”
In addition, the “recurring” impact of building a home has a ripple effect beyond the first-year impact.
“Every two homes built, has the impact of creating the equivalent one recurring full-time job,” Whiton said. “So if do 8,500 homes this year, that translates into 25,000 to 30,00 new jobs.”
Consumers increasingly turning to new homes, because of the unprecedented lack of inventory of resale homes on the market.
There are now fewer resale homes on the market since Metrolist began tracking statistics in 1985, even though there are more than a million more people living in the metro area today.
For homes priced in the “sweet spot” from about $225,000 to $350,000, there are five buyers for every home available, according to some Realtors.
“There is this incredible pent-up demand from consumers, now that the economy is becoming better and consumer confidence is rising,” said housing consultant S. Robert August.
“The demand can’t be met by resale homes; there is simply nothing available,” he said. “A lot of Realtors are waking up to the fact that they need to start selling new homes.”
However, both August and Whiton agree that builders, for the most part, aren’t building speculative homes that aren’t pre-sold.
“I think for the most part, builders are just trying to keep up with the orders they have right now,” Whiton said.
At the same time, consumers increasingly prefer new homes to resale homes, he said.
Courtesy of InsideRealEstateNews.com – sponsored by Universal Lending,Land Title Guarantee and 8z Real Estate.
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