Friday, July 16, 2010

Building permits up 39 percent year-to-date

Building permits for new housing construction in Colorado are up 39 percent for the period of January through May as compared to the same period last year. According to housing permit data provided by the U.S. Department of Commerce, there were 5,089 housing permits issued in Colorado from January to May during this year. There were 3,650 during the same period last year.

However, during the same period of 2005, which saw the largest number of new permits since the national recession of 2001, permits for 2010 are down 73 percent. 18,855 permits were issued from January to May of 2005.

Year-long totals reflect very similar trends. The permit total for 2003, following the national recession of 2001, fell only to 39,446, and had climbed again to 46,000 by the end of 2005. However, by the time of the substantial weakening of the real estate markets in 2007, total permits issued for the year had fallen to 30,420. 2009's annual total for permits issued was 9,393.

The drop in building permits in recent years reflects the increased difficulty in obtaining financing for new residential building projects, as well as growth in housing inventory during the same period. Since 2009, housing inventory has slowly diminished, and rent growth has begun to appear in multifamily and single-family rentals. This would indicate future demand for more building. However, continued difficulty in obtaining financing for construction will diminish demand for new construction, while overall concern about economic growth will continue to drive caution.