Home building activity in the Denver area continued to soar in May, with no slowdown in sight for at least the near term.
Builders in the metro area pulled 1,986 permits in the first five months of the year for single-family detached homes, 49.6 percent more than the 1,328 during the same period in 2011, according to a report released today by the Home Builders Association of Metro Denver.
May’s tally was the 14th consecutive month that builders pulled more permits when compared with the same month in 2011.
“The market continues to be strong,” said Jeff Whiton, president and CEO of the HBA of Metro Denver. “Year-to-date, on single-family detached homes, we are up 50 percent and that is good. I’m sure next month will add to the string and the next two or three months also look strong. After that, it is just a little far out to predict what will happen. I just can’t see past the horizon.”
The survey covers the counties of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Elbert and Jefferson and all of the communities in the counties.
The report shows that builders were issued 503 permits in May, up 71 percent from the 294 in May 2011. Some places saw huge percentage increases, even though the numbers were small. In Arvada, for example, builders pulled 39 permits for single-family homes, a 457 percent increase from May 2011, when a mere seven permits were issued. Longmont experienced even a larger percentage gain with even tinier numbers. In May, permit activity grew by a whopping 900 percent, as builders pulled 10 permits last month, compared with only one in May 2011.
Whiton said home sales activity is happening across the board, from first-time home buyers to aging baby boomers looking to downsize.
“The most popular price is in the $275,000 to $325,000 range, but we are seeing some increased strength in the $450,000 to $700,000 market,” Whiton said.
“Builders are telling me that they are seeing a lot of traffic (through models) and the conversion rate (to buyers) are very strong,” Whiton said, although the building activity is still only about a third where it has been historically.
He said master-planned communities seeing a lot of activity include Stapleton and Solterra in Lakewood. Housing consultant S. Robert August said last month’s purchase by Oakwood Homes for 2,600-acres of the northern portion of Banning Lewis Ranch in Colorado Springs was an “spectacular deal” that will provide Oakwood with home building lots for the next decade.
Across the country, home building activity is expected to grow, Lawrence Yun, chief economist of the National Association of Real Estate Editors conference in Denver said last week.
“If construction loans begin to open up, I would not be surprised to see a 70 percent increase in housing starts,” Yun said during a panel discussion last Friday at the Brown Palace Hotel.
“The missing component of the economic recovery is a strong residential construction recovery,” Whiton said.
On average, a new home in the Denver area generates about $33,350 in fees, permits and taxes and each new home creates an average of 3.3 new now jobs,and every two homes built creates an ongoing need for another full-time job each year, year after year, he said.
August said that the big national builders, or local builders such as Oakwood Homes with access to capital, have benefitted the most. It is still tough for smaller, local builders and semi-custom builders to get financing,
The No. 1 builder the metro area in the first five months of the year was Century Communities, with 390 permits, according to the HBA of Metro Denver. It is closely followed by Richmond American Homes of Colorado, which is owned by MDC Holdings, with 389 permits. Other active builders in the metro area:
- D. R. Horton, 153 permits.
- Meritage Home, 142 permit.
- Lennar, 137 permits.
- Shea Homes, 108 permits.
- KB Home, 103 permits.
- Taylor Morrison of Colorado, 94 permits.
- Ryland Homes, 92 permits.
- Remington Homes, 63 permits.
To see what homes are available for sale at Stapleton, please visit this COhomefinder.com link.
To see what homes are available for sale at Solterra, please visit this COhomefinder.com link.
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