Richmond American Homes remains the largest builder in the Denver area. This model in Anthem Highlands in Broomfield is priced from the $300,000s.
Home building activity in the Denver area jumped by 51.5 percent in the first eight months of this year, compared with the same period in 2011, according to a report released today.
The report by the Home Builders Association of Metro Denver shows that builders pulled 3,667 permits for single-family homes in the first eight months of the year, compared with 2,434 during the same period in 2011.
The report covers the counties of Adams, Arapahoe, Boulder, Broomfield, Denver, Douglas, Elbert and Jefferson, as well as all of the municipalities within those counties.
In August, builders pulled 649 permits for single-family detached homes, a 67.3 percent increase from the 388 in 2011, continuing the trend of year-over-year increases.
However, permit activity, which reflects future starts, is coming off a low-base, resulting in large percentage gains, noted local housing consultant S. Robert August.
Builders are pulling about a quarter of the permits they did during most of the past 30 years, August said.
The lack of building activity is even more dramatic, considering population growth August said.
?You would think that we would be seeing far more housing starts, because our population has grown to 2.8 million or 2.9 million from 2.1 million,? August said. ?With a bigger population comes a bigger demand, but we are still building a fraction of the houses we did during ?80s, ?90s and the first part of the 2000s,?
Still, builders have picked up the pace of construction to meet demand from consumers.
?There is a tremendous amount of pent-up demand in the Denver metro area,? August said. ?That will continue as our local economy improves, people feel more secure and comfortable in their jobs and consumer confidence improves. I remain cautiously optimistic. As we know, things can change on a dime.?
A number of new builders are entering the market to take advantage of the increased demand, he said.
And a number of Realtors increasingly are showing clients new homes, because the inventory of resale homes is down about 40 percent, he said.
?For the most part, though, builders are not constructing a lot of spec homes, so there is not a lot of standing inventory of new homes available,? August said. ?But if a buyer is willing to wait until the new home is delivered, they can get the new features that you can?t find in most existing homes.?
Earlier, Peter Niederman, CEO of Kentwood Real Estate, said that he thinks that builders are doing an excellent job of constructing homes to meet the needs and demands of prospective buyers.
?I think builders, whether it is?Richmond Homes, or anyone else, are doing the best job I have ever seen of building for the market,? Niederman said.
Richmond, owned by Denver-based MDC Holdings Inc., remains the largest builder in the metro area. It pulled 759 permits in the first eight months of the year in the Denver area, 71 percent more than the 444 during the same period in 2011. Century Communities was No. 2, pulling 470 permits, almost a 75 percent increase from the 275 permits it pulled in the first eight months of 2011.
August said new home activity also is benefitting from rising apartment rents. One renter in Cherry Creek, for example, this week was told that his lease is about to expire and his rent is rising by 10 percent. Indeed, the HBA report showed that building activity for apartment is even stronger than for single-family homes. Municipalities issued permits for 1,649 permits in the first eight months of the year, just under a 74 percent increase from the 948 in the first eight months of 2011.
New home prices, however, also are going to rise, August said.
?The soothsayers are correct,? August said. ?As the market improves, we are going to see home prices rise. The cost of land, materials and labor are going to go up at least 10 percent over the next 12 months. Anyone who is sitting on the fence right now, better get off the fence and buy. Right now, they can take advantage of the lowest mortgage rates in history, as well as buying at prices that for the most part won?t be around a year from now.?
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.
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Source: http://insiderealestatenews.com/2012/09/hba-home-activity-rises-51-5/
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