11K New Home Permits in 2020

In The Denver Post on July 25th was a front page story in the business section about new home construction in Colorado written by Aldo Svaldi. His story includes data from the nation, our state, and the Front Range and I will focus on the latter. Aldo said, “Metro Denver is only back to around 60% of its prior home construction peak, despite having added 500k residents since 2006.” John Covert from Zonda (formerly MetroStudy) said, “We are not even building to the long-term historical average for housing starts and permits over the last 30 years.”

Metro Denver saw a small increase of just 1.4% in new home permits last year versus 2019. Why such a small increase?
· Denver County saw permit activity drop by 48% last year to 1,167 permits.
· Broomfield County saw permit activity drop 33% last year to 223 permits.
· Boulder County saw permit activity drop 23% last year to 573 permits.
· The increases in new home permits are coming from Arapahoe County—a 22.7% increase to a total of 2928 permits.
· Adams County where permits grew by 23% for a total of 2796 permits.
· Douglas County where permits grew by 6.6% for a total of 2797 permits.
· Elbert County where permits grew by 51%, for a total of 295 permits.
· Jefferson County saw permits increase by just 5% to 823 permits last year.
· El Paso County where permits grew by 25.3% for a total of 4928 permits.
· Larimer County saw permits grow by 38.6% for a total of 2190 permits.
· Weld County saw no change in permits with a total of 3334 permits.

So, in the 7-county Denver metro area builders pulled 11,029 permits for new single-family homes. For the 11-county Front Range builders pulled 22,054 permits last year.

As you can tell new home construction is going further and further out as homebuyers seek cheaper housing and more space, both inside their home and outside their home. I expect this trend will continue as I believe millions of Americans will go into a company office less than 50% of the time. Thus, a long commute two days a week is very doable and worthwhile for most people to have a bigger more affordable home.

Next, Aldo included data from Zillow that is very interesting—
· Since 2019, Denver median home price gains, at 14.6% have been most tepid for homes where the commute to downtown Denver is less than 10 minutes.
· Whereas homes 71 to 80 minutes away from downtown Denver saw median home prices rise by 32.6% since 2019.
· This reflects where the highest demand for housing is.