Residential Building Permits Continue to Climb

Local homebuilders stayed busy in September, although the rate of growth in permits slipped a bit compared with last month’s activity.

In September, residential permits were up 18 percent from a year ago and planned housing units more than doubled.

Cities in the 13-county metro area issued 481 permits for 1,424 new housing units during the month, up from 406 permits for 659 units in September 2012, according to the Keystone Report.

The combined value of the permits is $218.46 million, up 48 percent from a year ago.

Year-to-date through September, cities have issued 3,929 permits for 7,484 units, up 31 percent and 36 percent from last year. The report does not differentiate between single-family and multifamily units.

“Both single-family and multifamily permitting is up, showing continued strength in the new construction market,” Pamela Belz, the 2013 president of the Builders Association of the Twin Cities, said in an email.

So far in 2013, permits and units are nearly double the activity in 2010, according to a Finance & Commerce analysis of Keystone data.

Despite the strong September showing, the month-to-month growth rate in homebuilding permits appears to be tapering off a bit, according to Herb Tousley, director of real estate programs at the University of St. Thomas.

In August, permits and planned housing units were up 30 percent and 24 percent from the same period in 2012, respectively.

But Housley added that he’s not overly concerned about the dip.

“One month doesn’t necessarily indicate a trend, but you want to watch over several months to see if it continues to head in that direction or maybe this last month was kind of an anomaly,” he said.

Minneapolis led the metro area with 17 permits for 434 units in September, followed by Golden Valley (three permits, 167 units), Oakdale (one permit, 93 units), White Bear Lake (one permit, 86 units) and Osseo (one permit, 72 units).

The White Bear Lake numbers appear to be tied to the BoatWorks Commons project, an 85-unit market-rate apartment project at 4495 Lake Ave. S. in White Bear Lake.

As reported by Finance & Commerce earlier this month, the project from Lander Group and At Home Apartments is expected to start soon. The project includes restaurant or retail space, a public plaza and a community room.

On the single-family side, Woodbury topped the list with 40 permits for 40 units. Sixteen cities had double-digit permits for the month.

The Twin Cities is expected to see up to 6,800 new single-family homes this year, up from 5,750 in 2012, according to a new report from the University of St. Thomas Shenehon Center for Real Estate.

The report, released Tuesday, also found that the increase in the price of non-distressed homes is starting to moderate.

The August median sale price for a traditional home – houses not affected by foreclosure – was $228,000, up 1.38 percent from July, according to the university’s Residential Real Estate Price Report Index.

The median sale price peaked at $239,900 in June 2006, before the housing market crashed.

Home prices are rising as buyers are “tired of sitting on the fence” to make purchases, according to Belz.

“We are seeing this reflected in our Parade of Homes traffic and activity,” added Belz, who is the project developer with Senior Housing Partners, a division of Roseville-based Presbyterian Homes and Services. “Buyers want to beat further price increases and rises in the interest rates, which are still historically low but creeping up from what we have seen in the last few years.”

September residential permits in the Twin Cities

  2013 2012 2011 2010
September permits 481 406 324 286
Year-to-date permits
3,929 3,006 2,151 1,752
September units 1,424 659 410  679
Year-to-date units  7,484 5,497 3,127  3,854
September value
$218.4M $147.02M $106.53M  $124.14M
Year-to-date value $1.44B $1.074B $732.78M $764.07M

Source: Finance and Commerce