As the year draws to a close, the Denver-area housing market continues to show signs that the worst is over.
A report released late this afternoon by the HBA of Metro Denver shows that there were 3,271 permits pulled for new homes in the Denver area in the first 11 months of the year, a 4.2 percent increase from the 3,139 during the same period if 2010. November itself was an especially strong month for permits, which indicates future construction, with 311 permits being pulled, a 28 percent increase from the 243 in November 2010.
The new home market has been benefitting from a lack of competition from resale homes, where the inventory is 30 percent below where it was a year ago. Buyers of new homes also can take advantage of historically low mortgage rates of below 4 percent for a 30-year, fixed-rate loan.
“This is a sign that the recovery is happening, slowly but surely,” S. Robert August, a local housing consultant said. “This is a trend we are going to see increasing over the next several months. There is very little inventory out there. Even the foreclosures have been picked over. There will be more foreclosures coming on the market, but the good news is that those will be snapped up by investors who will quickly turn them into rentals.”
Meanwhile, other segments of the market are doing even better.
The Denver-area, like most of the country, is experiencing a big increase in apartment construction activity. Through November, developers pulled 1,417 permits for apartment units, a 41.4 percent increase from the 1,002 in the first 11 months of 2011. Denver is leading the charge, with 760 multifamily permits pulled so far this year. In November, 158 apartment permits were pulled – 118 of them in Denver, and the remaining 40 in Douglas County – compared with no permits in November 2011.
Long-term, August said more renters – including those living in their parents’ basements, or parents living in their children’s basements – will return to the American dream of homeownership when their financial situation improves.
“As the economy improves and more people find jobs, we will see a boost in home buying,” August said. “I do think the worst is over, although as we have experienced in recent months, a lot has to do with what is happening overseas.”
Attached homes, such as condos and townhomes, have shown an 8.8 percent year-over-year increase, with 785 permits issued in the first 11 months of this year, compared with 721 during the same period of 2010.
“Breaking it down, if you look at the for-sale side, for single-family attached and single-family detached, we have been up every month, on a year-over-year basis, since April,” said Jeff Whiton, President and CEO of the HBA of Metro Denver. “The trend is positive and very encouraging. We’ve had seven months of it now. We’re seeing a bit of improvement over a very bad 2010.”
For seasonal reasons, November is often a strong month for permit activity. “Builders like to get more foundations in before the snow flies, but that doesn’t explain why we would be up on a year-over-year basis,” Whiton said. “What I am hearing from our builder-members is that traffic has been pretty good and people are buying homes.”
He said he expects more of the same in 2012.
“I think we will continue to see year-over-year improvements,” Whiton said. “I don’t know what the magnitude of the improvements will be. But 2012 should be better than this year.”
Richmond American Homes of Colorado, the building subsidiary of Denver-based MDC Holdings Inc., continues to be the largest builder in the metro area, even though it has been much less aggressive this year than in 2010. Last year, it pulled 726 permits, while it has pulled only 397 through November. Shea Homes, however, the second most active builder in the Denver area, pulled 282 permits through November, compared with 150 in 2010.
Shea builds homes in Highlands Ranch and Reunion in Commerce City. The base price of its homes range from about $180,000 to more than $1 million.
The HBA report tracks building activity in the counties of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Elbert and Jefferson, as well as more than 20 communities in those counties.
To see new homes on the market priced from $4.75 million to less than $200,000, please visit this COhomefinder.com link.
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