Contractors obtained almost 4,000 approved building permits to start 2018, the most to start a year since 2001, according to a review of U.S. Census Bureau data.
There were 3,875 approved units in January. And it’s encouraging news that the increase over 2017’s start is driven by single family construction: 2,292 units versus 1,583 multifamily (mostly apartment units).
Single family home construction has lagged since the Great Recession in most states, including Colorado. Multifamily construction became a bigger part of the mix as homeowners were facing foreclosures and home builders went bankrupt.
Still, Colorado is far from out of the woods. The number of approved home building permits in 2017 was well below the levels before the recession, about 15,000 units shy off home building in 2004 and 2005. Of note, there were almost a million fewer people in the state back then.
“The market is still underbuilt given the amount of employment growth and household formations over the last several years,” says John Covert, a senior director at Metrostudy, which studies the Denver housing market. “Extremely tight supply of existing home inventory has prospective buyers frustrated, so they are gravitating to builder sales offices”
Home builders appear to be ramping up to respond to that demand.
Whether this is a lasting trend is impossible to know. Covert says part of the increase is due to builders playing catch up after many diverted attention to replacing a commonly used floor joist that turned out to be defective.