House Construction Down, Rental Prices UP!

From the Cromford Report:

The Census Bureau has just released its permit counts for March and they tell us a lot about what is going on with new home construction.
The single family permits totalled 1,003, breaking down as follows:

• Maricopa County = 862, down 14% from 997 in March 2013
• Pinal County = 141, down 37% from 223 in March 2013

Clearly the developers are cutting back on production in the light of reduced demand compared with last year. Since very few investors buy new homes, the numbers illustrate that the fall in demand cannot be explained away as purely because of the departure of a large number of investors. The 12 month rolling average is falling now, and currently stands at 12,480 single family permits per year. It has been at or close to this mark throughout the last year. Single family permits are only at one third of the rate we saw in 2002.
The multi-family numbers are going crazy. In March alone there were 1,586 single family units that obtained permits. This is highest monthly total in the last 13 years apart from February and November 2007. The monthly numbers are quite volatile, but the 12 month moving average is now up to 6,660 units. We can justifiably claim that this rate is fully recovered to the level of 2002.
The multi-family developments permitted over the last 12 months have been in:

• Scottsdale = 2,075
• Phoenix = 1,750
• Tempe = 1,400
• Chandler = 965
• everywhere else = 499 (includes Gilbert, Glendale, Goodyear, Mesa, Surprise, Cave Creek, Apache Junction, Maricopa, unincorporated Pinal)

These multi-family developments are very concentrated in a small area and relatively expensive. The average construction cost is $129,605 per unit. This is almost double the average construction cost reported in the same period 10 years ago.
The developers are depending on strong demand from affluent renters.

Average renters are seeing very little built to satisfy their price point and the supply of single family rentals is starting to drop again. They are down to the lowest supply level we have measured in recent history. Average rents are starting to increase too.


#Avondale , #Goodyear , #Buckeye , #Glendale,  #Phoenix, #Surprise, #Peoria, #Tolleson, #Laveen, #Waddell , #Wittman