May 24, 2012
Portland-area homebuilders are well on their way to their most productive year since 2008.
Metro builders pulled permits for 382 single-family homes in April, according to numbers released Thursday by the U.S. Census Bureau. That’s the most of any month in two years, and the strongest April since 2008. The homes permitted in April, based on square footage and construction type, would be valued at $94 million.
“As sales take off, our production follows it, and it’s making us work very quickly,” said Darren Gusdorf, general manager for Icon Construction & Development LLC in West Linn. “I haven’t worked this hard or this fast since I’ve been with the company.”
New-home construction has struggled since the 2007 puncture of the housing bubble, which brought home sales to a trickle. To compound matters, most builders didn’t slow their production until well into 2008, leaving a large inventory of unsold homes once they did apply the brakes.
But the supply of homes for sale has since dwindled. Many owners are loathe to sell their home at its new, lower market value, and the shrunken inventory has boosted buyers’ interest in new homes.
“What we’re seeing is a market that essentially turned on a dime,” said Gordon Root, president of the Home Builders Association of Metropolitan Portland. “We’ve gone from a market that was recovering to a very hot market.”
New homes make up a much smaller share of overall sales than existing homes, but construction jobs and the need for building supplies give them an outsized impact on the broader economy.
Root, whose development company Root Holdings LLC supplies homebuilders with ready-to-build lots, said builders would likely be building – and selling – houses more quickly if lenders were more inclined to finance construction of new homes.
“If we had more homes on the market, we believe new homes would represent a larger share of the market,” he said.
But lenders, wary of re-creating the oversupply of 2008, have been reluctant to increase credit.
Through April, builders have been granted 1,354 permits for single-family homes, 33 percent more than the same period in 2011. The difference represents almost $70 million worth of additional homes.
The year-to-date numbers are a virtual tie with 2010, when the housing market’s strong start – driven by a first-time homebuyers tax credit – petered out in March. If the numbers don’t do a similar nosedive this year, the 2012 numbers will easily outstrip those from 2010.
And including new apartment construction in the count – 706 units in 18 buildings so far this year – puts 2012 on track to be the strongest year for new residential construction since 2008.
But it’s still a far cry from the peak of 2006, when builders had pulled more than 3,800 single-family permits – plus 76 apartment buildings – through April.