Strong job growth and a healthy economy have helped propel Colorado Springs-area home construction to its fastest pace in 13 years.
Single-family home building permits issued this year in El Paso County now total 3,764 — exceeding last year’s tally of 3,504 and the most since a record 5,314 permits were issued in 2005, says a report Monday by the Pikes Peak Regional Building Department.
“It’s very exciting,” said Todd Anderson, board president of the Housing & Building Association of Colorado Springs and owner of a building industry and leadership development consulting firm, who lauded the Colorado Springs Chamber of Commerce & EDC for its job creation efforts.
“Employers are seeing the quality of life that their employees can get living in Colorado Springs versus Denver, which is a little bit congested now, and housing is so out of reach for most workers that we really represent a pretty affordable alternative to Denver.”
County employers added a little more than 5,500 jobs from the second quarter of last year to the same period this year, state Department of Labor Employment figures show — a strong and sustainable growth rate, one local economist said after the figures were released last week.
A separate federal report, meanwhile, showed the area’s unemployment rate dipped to 3.9 percent in October from 4 percent a month earlier.
In addition to more jobs locally, Denver-area employees are buying in the Pikes Peak region and commuting because Springs-area housing costs are tens of thousands of dollars cheaper, housing industry officials have said.
Other factors have helped the homebuilding industry as well. Mortgage rates have remained relatively low, even as they’ve ticked up near 5 percent for long-term loans. A tight inventory of existing homes for sale, meanwhile, has driven some buyers to new houses.
“It’s a lot of things all working together over a good long period of time,” Anderson said.
This year’s building permit figures were given a big boost when the Regional Building Department issued 419 permits for construction of Springs-area homes in November. That’s a year-over-year rise of a little more than 40 percent and the first increase in permits since July, the report showed.
November’s increased permits might have been the result of homebuilders positioning themselves for 2019.
Some builders take out permits at the end of a calendar year to avoid increased costs associated with new building codes or other regulations that might take effect the following year, Anderson said.
Also, some new neighborhoods are coming on line after months of delays, prompting builders to take out a flurry of permits.
And, the first three to four months of a new year often are a popular time for consumers to purchase, he said. If builders believe the Springs economy is strong and the housing market is healthy, they’ll take out permits late in the year with the goal of adding speculative homes — houses built on the expectation that buyers will come along later to purchase them.
“Most builders are feeling very bullish about going along on inventory homes, spec homes,” Anderson said. “So you’ll see that also at the last couple of months of the year. ‘Hey, let’s get some inventory in the ground so it’s available to deliver in that first quarter, that first 120 days of the new year.’”
By the time December numbers are recorded, this year’s building permit total could exceed 4,000, he said.
And 2019 should see a similar number, Anderson said, although he cautioned that rising interest rates and higher construction costs could slow the market.
“But we don’t see that happening necessarily in 2019,” he said, “because the demand side of that equation is still so strong.”