Getting your player ready...
Overall, Denver-area new home activity in the first quarter fell by 18.84 percent from the same period in 2010, led by a 30.23 percent drop in permits for single-family attached homes – primarily condos and town homes – shows a report released today.
Developers and builders pulled 1,116 building permits for homes, condos/town homes and apartment units in the first quarter, compared with 1,375 permits during the first quarter of 2010, according to the report by the Home Builders Association of Metro Denver. The report includes the counties of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Elbert, and Jefferson, as well as 22 municipalities. Permits signal future construction, as builders pull them before they start construction.
Builders only pulled 150 permits for single-family attached homes in the first three months of the year, compared with 215 during the same period last year. Denver accounted for the single biggest block of home permits with 34, or 22.6 percent of the total. Some 722 permits were issued for single-family detached permits in the first quarter, down 21.7 percent from the 922 issued in the first quarter. In March, however permit activity was only down 7 percent, with 315 permits being issued, compared with 339 in March 2010.
Not out of the woods
“We are not out of the woods yet, are we? It is discouraging,” said Mike Rinner, of the Genesis Group, which tracks the housing market along the Front Range. Rinner is putting the finishing touches on his first-quarter new home sales report. The first two months of 2011 are a bit ahead of 2010 for sales, he said, “and hopefully that momentum continued through March.”
Rinner said the latest HBA figures are not a suprise.
“Last year, the single-family detached market was obviously boosted by the tax credits,” for first-time home buyers and qualified move-up buyers, Rinner said.”In anticipation of the tax credits, builders were doing everything they could to make sure they could get the homes started, sold and get closed by the deadlines.” The homes had to be under contract by April 31, 2010, and initially had to be closed by June, although the closing date was later extended to September, Rinner said.
“Builders were impacted by the same thing as with the resale market,” Rinner said. But there is more to it than that, he said.
“Builders got a little ahead of the game at the end of last year,” Rinner said. “They ended up with a pretty good inventory of detached homes. Production builders had homes in the ground, ready to sell them early this year. so it’s not surprising that permit activity is down compared to last year.”
Some observers have argued that given how fragile the resale market, and with all of the foreclosures on the market keeping down prices, there is no need for new homes, Rinner said that is not true.
“There are not too many vacant homes in the marketplace,” Rinner said. “There are plenty of homes on the market that are for sale, but people are living in most of the housing stock. People are still buying new homes. There is a demand for them.”
Apartment activity, in contrast to the for-sale market, showed a modest increase in activity. Permit activity rose 2.52 percent in the first quarter on a year-over-year basis. There were 244 permits pulled – 231 of them in Denver – in the first quarter, compared with 238 in the in the first quarter of 2010. The 231 units pulled in Denver were the only permits pulled in March. Apartment permit activity in March was up 13.8 percent compared with the 203 permits pulled in March 2010.
Contact John Rebchook at JRCHOOK@gmail.com
