Home building up 25%

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Highlights:

  • HBA of Metro Denver releases October report.
  • Report tracks permits 8 counties and 26 communities.
  • Permits indicate future building activity.
This 5,920-square-foot home under construction n Golden is on the market for $925,000.

This 5,920-square-foot home under construction n Golden is on the market for $925,000.

New home building activity in the Denver area is showing no signs of slowing, according to a report released on Monday afternoon.

In October, builders pulled permits for 573 single-family detached homes, a 28.5 percent increase from the 446 permits issued in October 2012.

In the first 10 months of the year, builders were issued 5,708 permits for single-family homes, a 24.6 percent increase from the 4,583 permits issued from January through October of last year, according to the report by the Home Builders Association of Metro Denver.

In September, permits fell by 9.6 percent from September of last year, although on a year-to-date basis permit activity was up 24 percent in the first three quarters of the year.

The market is now back on track, said Jeff Whiton, president and CEO of the HBA of Metro Denver.

“In the previous month, the market kind of stalled out a little bit,” Whiton said.

“It is encouraging to see this month, almost up 29 percent,” Whiton said.

“We are also starting to see more townhomes and some condos being built, which is a good thing,” Whiton said.

Year-to-date, builders have pulled 1,000 permits for single-family, attached homes, “which are basically all townhomes,” Whiton said.

That is almost 38 percent more than the 726 permits issued in the first 10 months of 2012.

Permits indicate future development, while starts reflect actual construction.

The HBA report includes the counties of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Elbert and Jefferson and all of the communities in each county.

The blip in September occurred because “interest rates jumped,” Whiton said, but noted they are “now moderating.”

Also, builders “just ran out lots,” he said.

“We’re now seeing some new projects coming on line.”

Builders don’t appear to be overbuilding.

“We are still seeing pretty good demand,” Whiton said. “We are seeing demand in Parker, Castle Rock, Douglas County, Aurora, Thornton and eastern Boulder County, in places like Erie. Demand is pretty broad-based. In addition, master-planned communities like Stapleton and Brookfield in its Midtown development in Adams County, just north of Northwest Denver, are doing extremely well.”

Local housing consultant S. Robert August said that the demand will continue through next year.

“I think this report a sign that portends excellent for the next 14 months,” August said.

“Demand is still higher than the supply,”
he said.

However, there are headwinds.

“We had so much water damage from the Biblical rains in September in northern Colorado that is creating an even bigger shortage in materials and labor,” August said.

That, in turn, is delaying the completion of homes in the Denver area and closings, he said.

“Demand is still there and we still have job formation,” August said. “Now, it is just a function of getting everything up to meet the demand.”

The report also shows that Richmond American Homes of Colorado remains the largest builder in the metro area.

Richmond, which is part of Denver-based MDC Holdings Inc., has pulled 1,075 permits in the first 10 months of the year, almost equal to its next three competitors, Lennar, D.R. Horton and Meritage Homes.

In addition, permits were issued for 3,534 apartment units in the first 10 months of the year, more than double the 1,723 during the same period last year. In October, builders pulled permits for 553 apartment units, more than seven times the 74 in October 2012.

When for-sale and apartment permits were totaled, builders pulled 10,368 permits in the first 10 months of the year, 46 percent more than the 7,099 during the first 10 months of 2012.

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Have a story idea or real estate tip? Contact John Rebchook at  JRCHOOK@gmail.com. InsideRealEstateNews.com is sponsored by Universal Lending, Land Title Guarantee and 8z Real Estate. To read more articles by John Rebchook, subscribe to the Colorado Real Estate Journal.

 

 

 

 

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John Rebchook

John Rebchook has more than 30 years of experience in writing and communications. As the Real Estate Editor for the Rocky Mountain News, he wrote about residential and commercial real estate for 26 years. He has won numerous awards for business stories and columns that he wrote, both as an individual and part of teams. In addition to real estate, he also covered economic development, banking and financing, the airlines, and cable TV for the Rocky. In addition, he was one of the original freelance writers for GlobeSt.com, covering commercial real estate for the Internet publication.

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