Tuesday, June 4, 2013

Multifamily permit growth in Colorado moderates in 2013, singlefamily growth accellerates

Through April of 2013, multifamily building permits were up 54 percent when compared to the same period of 2012. The four-month total for 2013 in multifamily permits was 3,084 compared to 1,992 during 2012. 

In single-family permits, through April, there have been 4,993 permits this year, compared to 3,389 during the first four months of 2012. That's an increase of 47 percent. 

During this year's the month of April alone, there were 1,408 single family permits and 343 multifamily permits issued. During April of 2012, there were 1,070 and 884 single-family and multifamily units, respectively. 

The first graph shows cumulative totals from January through April of each year:

The second graph shows month to month totals in permits. Note the upward drift in both single-family and multifamily permits.  Totals, of course, remain well down from peak levels. We can see in both of the first two graphs that multifamily permitting is more or less at a ten-year high and is at levels seen during periods of solid economic growth such as 2007.

During April 2013, the number of new multifamily permits were at a moderate level, but this followed March 2013's multifamily permitting which was one of the most active months for multifamily permits in a decade. 

Single-family permits for April were at a six-year high exceeding even the permitting levels experienced during early 2008, before the financial crisis. New permitting fell off heavily after 2007, once it became obvious that new home inventories were beginning to get big. 

In this report, single-family permitting has behaved as expected, showing continued ongoing growth. Multifamily growth during 2013 appears to have moderated from 2012's growth rates which were often over 100 percent. We expected 2012-2013 growth to be more limited than 2011-2012 growth.  Nevertheless, with a growth rate of more than 50 percent, from 2012 to 2013, permitting growth continues to look solid for now. 

In single-family, builders are responding to home price growth and limited inventory, but as RPX has pointed out, there are many factors that may contribute to growth in inventory and a moderation in home price growth.