Inflation impacts new-home permit values
The number of permits pulled in March was 200, up from 125 in February and only 94 in March 2011. The March number was last seen in 2007 and is still less than one-third the peaks reached in 2004 and 2005. In other words, we still have a long way to go before we regain the exuberance of the home construction boom. But we're much better off than the metropolitan areas that really boomed, such as Las Vegas, Southern California and many communities in Florida.
Let's take a look at changes in the average value of permits pulled and inflation in Northern Colorado since 1988, the mid-point of the last energy boom in Colorado. I have normalized the average single-family detached-home permit value and inflation to their January 1988 levels so we can see relative changes since that month. (See accompanying graphic.)
Homes to be constructed, represented by the average value of the permits pulled for their construction, increased 3.73 times between January 1988 and June 2007. (Average permit values have peaked to near four in the three months since June 2007, but those months are aberrations caused by a heavy mix of