Home building in the Denver area rose by 43.4 percent in the first four months of the year, compared to the same period in 2011, according to a report released today.
An increase in building permits for single-family, detached homes is a trend for more than a year, said Jeff Whiton, President and CEO of the Home Builders Association of Metro Denver, which released the building permit report.
“This is 13 months in a row in which builders have pulled more permits than in the same month a year earlier,” Whiton said.
“Everybody had high expectations for this year and we have met those expectations,” Whiton said.
From January through April, builders pulled 1,483 permits for homes, compared with 1,034 in the first four months of last year. In April, builders pulled 440 permits, 41 percent more than the 312 in April 2011.
The report includes the counties of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Elbert and Jefferson, as well as all of the municipalities in those counties.
The county with the most activity was Denver. Builders pulled 250 permits through April, 44.5 percent more than the 173 in the first four months of 2011.
Builders are benefitting from a low-supply of resale homes. The inventory of unsold previously owned homes is down 42.5 percent in April from April 2011. Permits are an indicator of future construction.
“I’ve been getting calls from Realtors asking what new homes are available,” Whiton said. “That is a little bit unusual. There just isn’t much out there to choose from.” Not that there is a glut of new homes on the market.
“There is not much builder-inventory available,” Whiton said. “It is getting to the point where we are going to start need to need to see some land development. We are running out of finished lots.”
A couple of years ago, only starter homes were sold. Many builders did things such as eliminate basements to keep the price down. That is starting to change.
“We are starting to see more demand for more expensive homes,” Whiton said. “The sweet spot is still around $275,000. But we are seeing jobs being created at higher incomes. And with interest rates so low, affordability has never been higher.”
Whiton was recently talking to one custom-home builder to see if he would be willing to put one of his houses in the Parade of Homes.
“He built eight homes and all of them have been sold,” Whiton said. “He told me he had no inventory to put in the parade. And this guy builds $1 million homes.”
Despite the big percentage increases, activity is still down by historical levels.
“We are probably going to have 4,000 to 4,500 starts this year, about 30 percent of where we used to be,” Whiton said. “Almost all of the activity is in detached. The attached product, condos and townhomes, account for about 14 percent of the activity, while traditionally they account for about 25 percent.”
In the first four months, builders pulled 247 permits for attached home, 31.4 percent more than the 188 during the same period in 2011.
Apartment activity strong
Apartment activity showed the biggest percentage increase. Year-to-date, multifamily developers pulled 1,059 permits, 180 percent more than the 378 in the first four months of 2011. Apartment activity grew by a whopping 445 percent in April, with developers puling 730 permits, compared with 134 in April 2011.
One change in the market is the Century Communities replaced Richmond American Homes of Colorado as the No. 1 builder in the Denver area.
Century Communities pulled 329 homes through April, while Richmond pulled 283. Richmond, which is owned by Denver-based MDC Holdings Inc., pulled 444 permits during the same period last year, 36.3 percent more than this year. Century Communities, by contrast, pulled 19 percent more than the 275 permits it pulled in the first four months of 2011.
“Century Communities has been pretty aggressive,” Whiton said. “They build a very good product in great locations.”
Century Communities builds from Broomfield to Colorado Springs. Its homes, for the most part, are priced in the $200,000s, although it has some models priced at more than $400,000.
To learn what new homes are on the market, please visit COhomefinder.com.
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