Friday, September 30, 2011

Multifamily permits at ten-year high during August

During the first eight months of 2011 in Colorado, building permits issued for multifamily construction are up 169 percent, year over year, while permits issued for single-family construction are down 0.04 percent for the same period.

This year, through August, there have been 2,384 multifamily permits issued in Colorado, and 6,447 single-family permits issued. For the same period during 2010, there were 883 multi-family permits issued, and 6,450 single-family permits.

For the month of August alone, single-family permits are up, year-over-year, by 21.5 percent, but multi-family permits are up 2,520 percent, reflecting a tiny permit total of 25 during August 2010. There were 1017 single-family permits and 655 multi-family permits issued during August 2011. There were 820 single-family permits issued during August 2010.

The second graph shows that overall, both multi-family and single-family permits in August are at levels below what was typical over the past decade, but that both are increasing. In the case of single-family permits, seasonal factors are contributing to the uptick in permits issued.

During August, the number of new multi-family permits issued was at the highest total reported since October 2008. In other words, multi-family permit activity is at the highest level seen since the financial crisis of 2008.

Regionally, new construction of single-family homes showed year-over-year increases during June and July, but was unchanged during August. See here for more.

Multifamily activity has shown indications of renewed growth in the year-to-date totals in recent months. There has been much optimism within the multifamily industry about rent growth which in turn will lead to new construction.

Multifamily permit activity during August was at a ten-year high. The third graph shows that August's permit total was up from 2010 and is now at the highest August total since 2002.

Growth in single-family permit activity suggests there is some hope among single-family homebuilders, but that demand is restrained. August's permit total for single-family units was at a 3-year high, although it remains well below typical August totals reported over the past decade.

Conclusions: This data further reinforces the notion that interest in new multifamily construction continues to increase at a much faster rate than single-family construction.