Tag Archives: building permits

September 20, 2011 · 9:37 am

Housing Units Starts & Completed 2nd Qtr 2011

Image via Wikipedia

The US Census released the 2nd Quarter report on Housing Units completed. There is a fair amount of attention placed on this report from a National perspective. Calculated Risk did a good job on reporting on the national figures of this report.

I am more interested in our regional activity, this report does not break it down by State but they do break it down by the Midwest region. These figures are the US Census Midwest Region which includes Chicago area.

As you can see on the graph above, there is slight uptick in housing units completed in the Midwest primarily due to Detached Units. The region is still bouncing along the bottom and will likely remain bouncing along the bottom for at least another year. This will not pick up until the employment situation turns around, once the employment situation begins to turn around creating added demand for new housing – construction will pick up adding even more jobs.

Above is the Housing Starts graph. (I forgot to attach this when I originally posted this early today.) This also shows a slight uptick in housing starts, however also bouncing along the bottom… We will be seeing reports on how housing starts are falling, listen for “seasonally adjusted” figures – we are heading into the winter months and starts will naturally slow down. Locally I am anticipating an increase next year in new housing starts assuming our housing inventory stays down and we don’t get swamped with a wave of new foreclosures.

What I found interesting in this report is the Square Footage of the completed housing units. It appears that builders tried reducing the square footage of new homes to get the pricing down, yet it appears the market is still demanding larger homes. I don’t know if you remember hearing all the media attention saying the “era of mcmansions” is over, only in their dreams. The consumer still loves their “elbow room” and space…

There is a demographic shift taking place where household size is shrinking and the expectation is that this demographic will no longer want the large homes. I am not so sure about that… Certainly there will be a need for less expensive housing and that can be achieved through smaller homes, but overall “size matters” in housing.

Builders Association of the Twin Cities, BATC has the Twin Cities Building Permits for July.

Minneapolis St Paul Building Permits and Housing Starts (craigkamman.wordpress.com)
U.S. States Where “No One” Wants to Buy a New Home (keatho.wordpress.com)
July Building Permits and Housing Starts for the Midwest (NAHB and Census Bureau) (craigkamman.wordpress.com)

Minneapolis St Paul Building Permits and Housing Starts

I just posted the Building Permits and Housing Starts for the State of Minnesota, and now I see they just released the Minneapolis/St Paul charts. This is what counts for us, not the national stats or State stats – although they are a good barometer.

As you can see we are “bouncing along the bottom” still. I wish we had data going back further to see how this compares to other recession periods. Housing Starts and Building Permits will continue to bounce along the bottom until the region starts creating more jobs, supporting additional population (immigration and natural birth). We need to keep a close eye on the employment figures, see chart following the permits and starts below:

These were released today (8/25/2011) from the US Department of Commerce: Census Bureau.

Mpls/St Paul 1 Unit Housing StartsMpls/St Paul Housing Units Authorized 8/25/2011

Minneapolis/St Paul Region Employment/Labor Force July 2011

As you can see with this chart, we have growing spread between employment and the labor force. (what the unemployment rate tracks). This shows us we have approx 122,728 unemployed in the labor force in the Twin Cities 7 County region. Assuming we could get to full employment, that is a lot of demand for housing. But let’s just calculate the difference between Jan 2005 and Jan 2011, that is approx 55,259 additional unemployed workers in the Twin Cities 7 County metro region. Not all of them will buy or rent housing, but a lot of them will. Keep in mind, we have approx 26,000 properties for sale in the Twin Cities metro region… If we use the old ratio of 1 housing unit to every 2 jobs (a number I pulled out of thin air..) we end up with demand for approx 27,629 housing units more than depleting our all of our supply. (double-check my math! I might have miscalculated on the back of a napkin here..) If that were to happen, builders would need to build approx 20,000 housing units to allow for immigration, new household formations, and move-up buyers. If employment turns around quickly, we could end up with a housing shortage. Not that we should be holding our breath right now, doesn’t look like anything promising that direction on the horizon yet..

Increasing employment is the only way this market will recover…

US Census – Department of Commerce: Building Permits & Starts for Minnesota 8-24-2011 (craigkamman.wordpress.com)
July Building Permits and Housing Starts for the Midwest (NAHB and Census Bureau) (craigkamman.wordpress.com)
Twin Cities doesn’t have a housing inventory problem, we have a jobs problem. (craigkamman.wordpress.com)

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Tagged as building permits, Census Bureau, Construction permit, Employment, home builders, housing starts, Minneapolis – Saint Paul, Minnesota, new construction, Twin cities building permits, twin cities housing starts, United States Census Bureau, United States Department of Commerce

August 16, 2011 · 10:01 am

July Building Permits and Housing Starts for the Midwest (NAHB and Census Bureau)

Well, today the news was released on the July Building Permits and Housing Starts from the National Association of Home Builders and the Census Bureau. Nationally building permits and housing starts are down according to these reports.

If we take a closer look at these figures, we can identify the conditions in the Midwest Region. Here is the data for the Midwest region: The Midwest Region’s building permits are down. This is just showing us what we already know, that the housing sector is struggling to gain traction. Our housing starts jumped early this year and are now dropping off.

I predict these numbers will climb in the Twin Cities region and possibly the Midwest, judging by the housing inventory dropping in the Twin Cities. As we get down to 3 to 5 month supply of homes, the building sector will need to kick into to gear to provide more housing. In order for us to get to that 3 to 5 month supply, we need JOBS.