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New home activity up 37%

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Highlights:

  • HBA of Metro Denver releases half-year report.
  • Home activity up 36.64%
  • Townhome activity up 42.82%

New home building activity in the Denver area rose 36.65 percent in the first half of the year, compared with the first six months of last year, according to a report released on Thursday by the Home Builders Association of Metro Denver.

Denver led the region for new townhomes, such as this duplex under construction. It lagged the region for single-family, detached home activity.

Denver led the region for new townhomes, such as this duplex under construction. It lagged the region for single-family, detached home activity.

The 3,423 building permits issued for single-family detached homes in the first half of the year continues a more than two-year trend of increased home building in the metro area.

In the first six months of 2012, 2,505 permits had been issued in the counties of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Elbert and Jefferson, as well in all of the communities in the counties.

Permits reflect future building, while starts reflect actual construction.

Broomfield busy

For areas that issued at least 100 permits this year, Broomfield led the metro area, as far as percentage increases.

There were 129 permits issued in Broomfield in the first half of the year, 174 percent more than the 47 in the first six months of last year.

At the other end of the metro area, Castle Rock issued 422 permits, almost a 82 percent jump from the 232 a year earlier.

Aurora issued 450 permits, the most of any community. That was 42.4 percent higher than in the first half of 2012.

Permit activity in Adams and Arapahoe counties almost doubled, although the numbers were smaller. Adams issued 85 permits in the first half of this year, compared with 43 last year, while Arapahoe issued 152 compared with 77.

Denver, however, bucked the trend and saw a slight decrease in activity.

There were 359 permits issued in Denver this year, down 8.2 percent from 391 in the first half of the year.

Meanwhile, permit activity for single-family attached units (mostly townhomes), was up 42.82 percent, with 567 permits being issued in the first half of the year, compared with 397 last year. In June, there were 126 permits issued for townhomes, up 40 percent from 90 in June 2012. Almost half of the townhome permits were issued in Denver.

August on June (housing data, that is)

Activity for new homes is being driven by a number of factors, said housing expert S. Robert August.

“It continues to point to consumer confidence and an improving economy,” said August, a long-time housing consultant in the metro area.

“Also, apartment units are almost 100 percent occupied and rents keep going up,” August said

“It is cheaper for a lot of people to buy a single family home than to continue to pay rising rents,” he said.

He said a lot of consumers are “working to get their credit fixed, so they can qualify to buy a home. And because there is only a 1.7-month supply of resale homes on the market, people are looking at all of their options.”

Rising interest rates also are convincing people to get off the fence, he said.

“Rates are not as low as they were, but they are still really low by historic standards,” August said.

“People are starting to realize that if they don’t buy now, they are probably missing a big opportunity,” he said.

Despite rising rates, prices on new homes continue to go up, he said.

Part of that is due to rising labor and commodity prices, as well as a shortage of supply and demand.

“It used to be just Realtors that were saying now is a good time to buy,” and a lot of consumers were skeptical of “Realtor-speak,” he said.

“Now, people themselves are realizing it is still a good time to buy.”

August said builders don’t care if someone gets cold feet and walks away from purchasing a new home.

“If a consumer had a contract to buy a home for let’s say $275,000 eight or nine months ago and now the home is being delivered, the builder knows if the consumer walks away from the deal he has people standing in line to buy it. And they will pay more.”

Apartment activity, which had been showing huge percentage jumps, has slowed, a move the industry welcomes. There were 1,559 permits issued for apartment units in the first half of the year, a 9.79 percent increase from 1,420 in the first half of the year.

In June, permits were issued for 271 apartment units, down 15.05 percent from 319 in June 2012.

Interested in buying a new home? Please visit COhomfinder.com for information about individual builders.

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.