Builders Look to Fill Supply Void Left by Declining Foreclosures

RealtyTrac has undertaken a new type ofrnanalysis, comparing building permit data from the Department of Housing andrnUrban Development (HUD) with foreclosure starts for the same time period at thernnational, state, and city level. It appears that the company is seeking tornpinpoint areas where either increased building, increased foreclosures, or bothrnwill increase inventories which are at historically low levels in somernlocalities.rn</p

RealtyTrac reports the following.</p

Building permits were issued in thernfirst quarter at a rate that was 27 percent higher than one year earlier andrnwas the highest first quarter number issued since 2008.  Foreclosure starts nationwide decreased by 27rnpercent on an annual basis to the lowest quarterly level since 2006.   Sixty-four percent of the building permitsrnwere for single family residences and 33 percent were for units in buildings ofrnfive units or more (multi-family buildings) and permitting for thosernmulti-family units were up 23 percent from a year earlier.  </p

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Texas, Florida, North Carolina,rnCalifornia, and Georgia issued the most single family permits in the firstrnquarter and all five states also had fewer foreclosure starts than a yearrnearlier although starts were down only 1 percent in Florida.  In Nevada, Washington, New Jersey, Maryland,rnand New York both foreclosure starts and single family permits increased from arnyear earlier.</p

On a metropolitan area level thernlargest number of single family building permits were issued in Houston,rnOklahoma City, Austin, El Paso and Fort Worth and of these all but Austin saw arndecrease in foreclosure starts.  Austinrnhad a 19 percent increase.   </p

All five cities with the mostrnforeclosure starts in the fourth quarter also posted increases in single familyrnbuilding permits.  These cities were Miami,rnLas Vegas, Chicago, Fort Lauderdale and Orlando.  Three of the cities, Las Vegas, FortrnLauderdale and Orlando had year-over-year increases in foreclosure starts.  </p

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Cities where both single familyrnbuilding permits and foreclosure starts increased at least 10 percent from arnyear ago included Las Vegas, Seattle, Raleigh, Reno, and Boca Raton.   Bothrnsingle family permits and foreclosure starts decreased in San Antonio,rnAlbuquerque, Fresno, Bakersfield and Greensboro, N.C.</p

“Nationwide and in most markets itrnappears builders are planning to ramp up activity that will help offset a droprnin foreclosure starts, but there are some markets where a jump in both buildingrnpermits and foreclosure starts in the first quarter indicate the scales willrntip more heavily in favor of supply of homes for sale in the coming months -rnboth new homes and foreclosures,” said Daren Blomquist, vice president atrnRealtyTrac. “On the other extreme there are some markets where both buildingrnpermits and foreclosure starts are down dramatically, indicating that there willrnbe no reprieve from the shortage of homes for sale in those markets in the nearrnfuture.” </p

RealtyTrac said it used permit datarnfrom HUD rather than the Census Bureau because the latter does not includernconcurrent year revisions to preliminary monthly data.</p

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