Home permits up 54.45% in 1st quarter | Inside Real Estate News

Highlights:

• HBA of Metro Denver releases permit report.
• March home permits up 48.6%
• 1,614 home permits issued in 1Q.

New home construction activity in the Denver area set a two-year streak of growth in March, according to a report released today.

In March, there were 627 building permits issued for single-family detached homes in the Denver area, from Adams to Elbert counties, a 48.6 percent jump from the 422 in March 2012, shows a report by the HBA of Metro Denver.

?March was the 24th consecutive month that permit activity had increased from the same month a year earlier,? said Jeff Whiton, president and CEO of the HBA of Metro Denver.

In the first quarter, builders pulled 1,614 permits, a 54.5 percent increase from the 1,045 permits issued in the first three months of 2012.

Meritage Homes is building houses priced from $374,990 to $423,990 in Tallyn?s Reach in Aurora.

Permits indicate future construction starts. The HBA report covers the counties of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Elbert and Jefferson, as well as all of the municipalities in each county.

?The market continues to show good strength across the marketplace, pretty much all over the area,? Whiton said.

In the first quarter, Aurora issued 246 home permits, the most of any single market and more than a 90 percent increase from the 129 permits in the first quarter of 2012.

Housing subdivisions are selling out so fast that builders are scrambling to find more lots in the metro area, Whiton said.

?The only thing that would slow the growth is the lack of lots, not consumer demand,? Whiton said.

With less than a two-month supply of resale homes on the market, new homes are increasingly becoming the choice for consumers. A separate report this week by independent broker Gary Bauer showed a 1.49-month supply of resale homes on the market.

Not only is there an unprecedented shortage of resale homes on the market, but Whiton argues that new homes are more attractive to consumers than resale homes because they are more energy-efficient and they have modern designs and features.

?I think we are going to see around 7,500 permits issued this year, compared to about 5,500 last year,? Whiton said.

?And last year, we had a 50 percent jump in single-family, detached permits from the prior year,? he said. ?The market today is in a much better place than it was two years ago.?

Still, historically builders have pulled about 15,000 permits each year, he said.

?So we are still only going to be 50 percent of where we are by historic standards,? Whiton said.

Housing consultant S. Robert August said he agreed with everything Whiton said, although he is even more bullish on prospects for the Denver-area new home marekt.

?I echo the sentiments of Mr. Whiton,? August said.

?All builders are selling out of subdivisions faster than anticipated,? August said. ?The biggest concern is they are running out of build-able lots.?

He said if you eliminate recessions in the Denver area, and only consider years of ?normal? growth, builders typically pull about 20,000 permits per year.

August said given the size of the Denver-area market, the historic average of permits issued and the lack of competition from resale, builders are not coming close to meeting consumer demand.

Builders in Denver, and across the country, are benefitting from a better economy and interest rates still near historic lows, he said.

?The economic pulse of the country is getting stronger,? August said.

However, he said that it will increasingly cost consumers more to buy a new home.

For one, costs for things such as commodities and labor are rising about 1 percent each month, he estimated.

?Everything needed to build a home is going up, whether you are talking about lumber or drywall,? August said.

?Also, the market is facing a labor shortage,? he said. ?Builders are actively trying to convince both skilled tradespeople and even unskilled workers, to come to Denver.?

Meanwhile, the lack of housing, puts builders in an enviable position, he said.

?It?s like if I had three ice cream cones to sell and I had 12 hungry people who wanted to buy them,? August said.

?Of course, I would sell the ice cream cones to the people willing to pay the most.?

August said the only dark clouds he sees on the horizon would be international problems, such as in the Middle East, could dampen economic growth.

But even that could have the opposite effect, he said.

?If that means more money is shifted to the Department of Defense, we could see defense contractors in the Denver area hiring more people and creating more jobs,? August said.

?And those are high-paying jobs.?

The report shows that Richmond American Homes of Colorado remains the largest builder in the metro area, puling 324 permits in March.

D.R. Horton was No. 2, with 138 permits. It was followed by Lennar, Meritage Homes, KB Home, Shea Homes, Century Communities, Oakwood Homes, Standard Pacific of Colorado, Boulder Creek Builders and Taylor Morrison of Colorado.

The report also showed that apartment building activity was up a whopping 467 percent in March, with 442 multifamily permits issued, compared with only 78 in March 2012. In the first quarter, apartment permit activity jumped by 153 percent to 832 from 329 in the first quarter of 2012.

Interested in buying a new home? Please visit COhomefinder.com.

Have a story idea or real estate tip? Contact John Rebchook at? JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by?Universal Lending,?Land Title Guarantee?and?8z Real Estate.?To read more articles by John Rebchook, subscribe to the?Colorado Real Estate Journal.

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Source: http://insiderealestatenews.com/2013/05/home-permits-up-54-5-in-1st-quarter/

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