Tuesday, October 30, 2012

Census: Building permits in Colorado up in 2012, almost back to 2008 levels

Through September 2012 in Colorado this year, building permits issued for multifamily construction were up 113.2 percent, year over year, while permits issued for single-family construction were up 37.8 percent for the same period. 

During September 2012 alone,  142 multifamily permits were issued in Colorado, and 1,342 single-family permits were issued. This is a huge decline in multifamily permits from August 2012, when 1,259 multifamily units were permitted. History has shown however, that multifamily permits are prone to large swings from month to month. 

During September 2011, there were 337 multi-family permits issued, and 821 single-family permits issued. The first graph shows permit activity for the first nine months of the year since 1999. Through September of this year, there have been 10,021 single-family permits and 5,803 multifamily permits issued.

For September alone,  multifamily permits are down 57 percent and single-family permits are up 63 percent, compared to September 2011.

The first graph shows cumulative totals through September of each year: 

The second graph shows that multifamily permits dropped off significantly in September following several months of robust growth. There is not necessarily a new trend being established here since MF permits are volatile. Single-family permits, however, tend to have a more reliable seasonal pattern. Single-family permits were fairly resilient for a September total and continue to show growth over recent years' activity. 

During September 2012, the number of new multifamily permits issued fell after a very strong August, when multifamily permits hit a decade-long high. Total multifamily permits for September were at the lowest level recorded since February of this year. 

Single-family permits for August were at a five-year high and actually topped the pre-financial-crisis permit total from 2008. This suggests that even single-family construction is beginning to see some real signs of life for the first time since 2008.  

In this report, single-family permitting has behaved as expected, showing slow ongoing growth. Multifamily permitting, on the other hand, was down following the huge month of August, but total year-to-date totals show a continuation of the trend in which overall activity this year is up by 100 percent or more when compared to last year. 

The third quarter's report on apartment vacancies and rents in the metro Denver area suggest that demand for apartments continues to be strong, which is likely to lead to continued multifamily construction, at least in the short term.