Home Construction Roars Back in Colorado
After years of lackluster growth, single-family home construction is finally making a comeback in many parts of the country.
One of the states leading the way is Colorado.
Permits to build homes there are at their highest level in six years, according to numbers released by the U.S. Census Department last week.
From the Here & Now Contributors Network, Ben Marcus of Colorado Public Radio reports on what’s driving the increase.
ROBIN YOUNG, HOST:
It's HERE AND NOW.
And after years of lackluster growth, single-family home construction is making a comeback in many parts of the country. One of the state's leading the way: Colorado. Permits to build homes there are at their highest level in six years. From the HERE AND NOW Contributor's Network, Colorado Public Radio's Ben Marcus reports on what's driving that increase.
BEN MARCUS, BYLINE: Real estate broker Justin Knoll has a personal stake in the next deal he's trying to close. He's ready to sell his own home in Aurora, Colorado, partly because prices have jumped by double-digit percentages, and partly because he's ready to downsize.
JUSTIN KNOLL: I have too much house, and I don't do a lot of business in that area. I don't have a lot of friends in that area. I do most of my stuff in Central Denver. So I'm in the position of being my own worst client in selling my property.
MARCUS: But Knoll doesn't want to move into another old home he has to fix up. He's looking for new construction, preferably in Stapleton in the Northeast Denver suburbs. Problem is, he's not the only one.
KNOLL: I'm competing with hundreds of other people. I'm on a waitlist just to get notified when lots are being released - not a waitlist to get a property, but to be notified.
MARCUS: As the economy has picked up, a lot of pent-up demand for homes has been unleashed. But there aren't a lot of new or existing homes on the market. Homebuilders like Gene Myers with New Town Builders are struggling to respond.
GENE MYERS: You can see, just looking out across the landscape, there's lot development almost for as far as the eye can see, and that is a huge change.
MARCUS: Myers' workers crawl over the plywood frame of a new home in Stapleton. He has 78 homes under construction right now, and all but one is already sold. A survey by the National Association of Homebuilders found that builders like Myers here, their confidence is at a seven-year high.
MYERS: Well, the last seven years haven't been that great, so I would say, definitely, my confidence is at a seven-year high.
MARCUS: He's confident because the fundamentals look good. Apartments in Denver are the fullest they've been in 13 years, so rents have spiked. Interest rates are up a little, but they're still near historic lows. So Myers says for a lot of people, owning a home is attractive again.
MYERS: There's definitely a huge sigh of relief going through the industry here in Denver among all the builders, whether they're big or small, because where we were literally was not sustainable. We weren't going to have an industry if this had lasted much longer.
MARCUS: Myers says some have called the 2008 economic collapse the great recession. But for homebuilders, it was the great depression. Myers had to lay off more than 80 percent of his workforce, and getting skilled workers back to the job site is one of the biggest challenges he's facing.
MYERS: Well, the truth is, it was a very tough time. This industry wasn't kind to some people over the last few years, and there are a lot of people that just changed careers, and they're not interested in coming back.
MARCUS: Myers says it's the boom-bust nature of the business that scares a lot of talent away. All this excitement in home construction isn't contained to the Denver suburbs. Other metro areas in the state are picking up, too, and that may have some fearing another bubble. But Ryan McMaken, an economist with the Colorado Division of Housing, says not so fast.
RYAN MCMAKEN: It's a big increase, but you certainly wouldn't describe it as massive, bubble-type production.
MARCUS: Building permits are still less than a third their normal level, and population growth in Colorado's main urban corridor remains incredibly strong. All those transplants from the Midwest and California need somewhere to live. Plus, builder Gene Myers says banks aren't nearly as eager to finance new construction as they were before the housing collapse. That brings us back to real estate broker Justin Knoll and his search for a new home. Like many of his clients, it looks like he's going to sell his old house before he can find a new one. So where will he live in the meantime?
KNOLL: I love my parents so much. They've offered to let me stay with them. I'm trying to wrap my head around living with my parents again at 37 years old, although I'm OK. It's not a financial thing.
MARCUS: But it is economics 101. Demand has simply outstripped supply. For HERE AND NOW, I'm Ben Marcus, in Denver. Transcript provided by NPR, Copyright NPR.