9/12/2008
Regis J. Sheehan & Associates
Lexington, Omaha, Indianapolis Show Biggest National Permits Gains
Multifamily housing construction remains mixed among metropolitan area as the disarray in the for-sale housing market continues. Nationally, multifamily construction permits dropped 9.1 percent over the first half of 2008. This follows the 10.1 percent decline registered over the same period in 2007. Declines in multifamily housing construction came primarily from the condominium/cooperative component.
The U.S. Census Bureau does not categorize its multifamily housing permits breakdown by rental and condo/co-ops at metropolitan area levels. The Bureau does follow-up surveys of individual permits to provide a breakdown of starts and completions for rentals and condo/co-ops nationally and the four census regions. Data for the first half of 2008 shows a 48 percent increase in rental starts and a 33 percent drop in condo/co-ops.
Multifamily permits in all metro areas combined declined by 9 percent in the first half, but rose 3.8 percent in the 50 most active metro areas. Increases occurred in 32 areas and 18 experienced drops. Six of the 10 most-active markets from the first half of last year saw considerable drops in permits this year. They include: Atlanta down 4,083 units a loss of 49.7percent; Miami-Fort Lauderdale-Miami Beach, -43.9% (-2,111 units); Chicago, -40.1% (-, 631 units); Phoenix-Mesa-.Scottsdale, -31.6% (-1,798 units); Houston, 28.5% (-3,061 units; and, Los Angeles-Long Beach, -25.6% (-2,272 units). All of these drops are largely attributed to the condo/co-op market collapse.
Other metro areas with large declines in multifamily housing permits in the first half of 2008 include; Washington, D.C.-MD-VA-WV, -32.6% (-1,431 units); New Orleans, -52.4% (-910 units); Jacksonville, FL, -44% (887 units); and, Portland-Vancouver, WA-OR, -31.1% (856 units).
The New York-Northern New Jersey -Long Island Metropolitan Statistical Area (MSA) continued to lead all metro area markets in multifamily residential permits, but with a caveat. Multifamily permits during the first half of this year in the Greater New York metro area jumped 64.8% to 35,542 units from 21,573 units a year ago. It has led all markets in the first six months of each year in this decade. Much of the increase this year occurred in June as a result of legislation affecting New York City, which enacted a new set of construction codes effective for permits authorized as of July 1, 2008.
Additional markets with the largest increases in numbers of units issued permits were; Lexington, KY, 393.2% up519 units; Omaha, NE,183.4% up 431 units; Indianapolis, 141% up 705 units; Las Vegas-Paradise, 104.3% up 1,759 units, and, Austin, 96.9%, up 1,642 units.
Much is made of the relationship between employment growth and the demand for rental housing. An available proxy for rentals would be observing multifamily permits vs. employment growth. Metro areas with the largest increases in the numbers of jobs added were almost all among the top markets in terms of the numbers of multifamily unit issued permits.
Apartment permit data for the top 50 apartment construction markets during the first half of this year appears on the next page.
Access the table with permit and employment data for all 362 metro areas here:
Employment and Residential Permits Activity - September 2008
Robert J. Sheehan is President of Regis Sheehan & Associates and is the retired NAA Consulting Economist.