- RealtyTrac releases report on permits.
- Average permit size in Denver topped $8,300.
- More people are fixing homes to enjoy the improvements.
The report by RealtyTrac showed that the average amount of an improvement in Denver in 2013 was $8,386, 32 percent higher than the average of $6,343 in 2012.
There were 10,658 permit issued in 2013, which equates to $89.4 million in construction activity, according to RealtyTrac, an Irvine, Calif.-based company best known for tracking foreclosures across the U.S.
The report includes construction by builders as well as improvements to existing homes.
Last year, 1,486 permits were issued for single-family detached homes and townhomes in Denver, according to the Home Builders Association of Metropolitan Denver.
That would leave 9,172 permits for smaller jobs. The report only covers the City and County of Denver and not the surrounding suburbs.
“This shows that Denver is the midst of a recovery,” said housing consultant S. Robert August.
“That bodes well for the economy and shows we are headed in the right direction,” he said.
RealtyTrac looked at building activity in the 13 largest counties in the U.S. from 2005 to 2013. Given the increase in construction costs during much of that period, it is unlikely that in non-inflation dollars more money was ever spent on remodeling.
Despite Denver being one of only two counties peaking last year, the average permit size was less in only four counties.
Kings County, NY, topped the list at an average of $87,515. And in 2005, during the real estate bubble, the average amount was $100,552 in Maricopa County, Arizona.
“I’m surprised it wasn’t higher,” in Denver, August said.
“You don’t get that much for $8,300,” he said.
Part of the reason for the surprisingly low number, he said, is because it is not uncommon for homeowners to fail to pull permits for jobs that require them.
“A lot of people will hire someone to finish a basement, for example, and never pull a permit,” August said.
Andrew Bailey, principal of RE:NU HOMES, said it is important to keep in mind that the permits would include small jobs for things such as electrical and plumbing work, which might be in the $2,000 to $3,000 range, or even less.
“I would say that $8,400 is in line with a typical bathroom remodel,” Bailey said. “Of course, you could completely gut a bathroom and it could easily be upward of $10,000 or $15,000.”
It would be difficult to have a kitchen remodeled for $8,400, he said.
“You could easily spend $15,000 on cabinetry,” Bailey said. “You could also get very nice kitchen cabinets for $5,000 or $6,000. But I would say you are looking at least $15,000 for a typical kitchen remodel.”
August said that there may have been more permits pulled in 2012 and 2011, because interest rates were so low.
“That is conceivable,” he said.
Bailey, however, said he thinks more permits were pulled in those years for small jobs.
“It was a function of the economy,” Bailey said, who last year did a lot of work repairing flood damage in northern Colorado, as well as in Denver.
“People wanted the work done, but they didn’t want to pay a lot of money,” he said.
More permits were pulled in 2011 and 2012 than in 2013, according to RealtyTrac.
Permit activity, in terms of numbers, not dollar volume, peaked in 2011, with 12,504, 14.8 percent more than last year. In 2012, 12,338 permits were issued, 14.8 percent more than in 2013.
In 2011 and even in 2012, a lot of people were giving their homes a facelift to increase its sales value, Bailey said.
Not only would the home sell faster, but in many cases they received a return on the improvement, he said.
“Today, I would say about half of our clients are looking at an investment return when they sell,” Bailey said.
“More and more, though, people are renovating their homes so they can enjoy it,” he said. “They know the home will be worth more when they do sell, but in the meantime, they want to enjoy living in a nicer home.”
“They aren’t doing it to fix it and flip it,” he said.
“The biggest challenge today is that there is basically no inventory on the market, so people are renovating their homes because they know they are going to being living there longer,” he said.
“Builders aren’t building enough new homes to keep up with the housing shortage on the resale side,” August said.
Year Permits Average price per permit Total in millions
2005 5,920 $4,193 $24.8
2006 5,552 $4,294 $23.8
2007 6,000 $4,462 $26.8
2008 6,161 $6,063 $37.3
2009 8,555 $5,327 $45.6
2010 10,809 $6,304 $68.10
2011 12,504 $6,143 $76.8
2012 12,338 $6,343 $78.3
2013 10,658 $8,386 $89.4
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.