Thursday, April 7, 2011

Building permit activity through February falls 30 percent for single-family, 14 percent for multi-family

Year-to-date in Colorado, building permits issued for single-family construction is down 30 percent, year over year, while permits issued for multifamily construction is down 14 percent for the same period.

This year, through February, there have been 988 single-family permits issued in Colorado, and 187 multi-family permits issued. For the same period during 2010, there were 1,419 single-family permits issued, and 218 multi-family permits.

For the month of February alone, single-family permits are down, year-over-year, by 47 percent, while multi-family permits are down 60 percent. There were 496 single-family permits and 50 multi-family permits issued during February 2011.

Permits remained at unusually low levels with both single-family permits and multi-family permits well below totals reported earlier in the decade. In spite of optimism in the multi-family industry about desires to engage in new construction, these plans have not yet become evident in permit activity this year.

In the first graph, it is clear that permit activity remains as low levels, with single-family permit activity approaching the initial lows achieved in late 2008 and early 2009. At 50 permits for February, multi-family permit activity remains above recent lows. Multi-family permit activity bottomed out at 5 permits in November 2009.

In the second and third charts, we compare permits by monthly totals over several years.

Single family permits in February were nearly tied for the lowest February total in at least ten years. Although the chart goes back to 2003 for reasons of readability, we know that February's single-family permit total has only been lower once in the past decade. There were 487 single-family permits issued during February 2009. 2011 January total for single-family permits was also among the lowest January total in the past decade.

February's total for multi-family permits issued was the lowest total recorded in the last decade. At 50 permits, February's total is a new monthly low for February going back at least to 2001.

In previous posts, we have discussed the repercussions of such a small amount of new construction in multi-family housing. See here for the most recent construction job info. Since permits are a helpful indicator of future construction, it stands to reason that new construction will continue to be at historic lows for the short term, which will in turn drive up rents and keep vacancy rates low.