Is Help on the Way for Lack of Inventory Issue?
As the housing market continues to rebound and existing inventory becomes scarcer; new permit activity for new builds continues to grow.
Multifam permits vs. singlefam permits: Multifam at 30-year high
The amount of new permit activity that is devoted to multifamily permits reached a 30-year high during 2012. The first graph shows the total number of permits issued in each year.
Obviously, there are far more singlefamily permits than multifamily permits in almost every year, and since the 1990s, we see that when big growth occurs in the total number of permits issued, single-family permits tend to dominate.
In some periods, however, multifamily permits become a sizable portion of the total number of permits being issued. Back in 1984, the proportion of all units that were multifamily units hit a very-high 44 percent. Back then, it wasn’t just apartments, though, as there was a lot of condo activity going on during the early 80s boom in Colorado. That all came to an end soon after, though, and the number of multifamily units crashed along with the economy.
During 2012, the proportion of permit activity that was multifamily surged to 43 percent. It seems that anything around 40 percent or above is a very high number for multifamily activity, and 2012 was certainly one of the biggest years for multifamily as it eclipsed singlefamily permit activity. Indeed, multifamily permit activity grew 125 percent from 2011 to 2012 and singlefam activity rose only 50 percent.
Also, it’s probably not too big a stretch to say that if we’re looking at just apartments here, and excluding condos, 2012 was probably the biggest year ever for the total amount of permit activity that was devoted to multifamily. There’s very little condo activity right now, so apartment activity in 2012 was almost certainly a bigger factor that was the case during the multifamily boom of 1984.