Year-End Single-Family Building Permits
The Builders Association of Greater Indianapolis (BAGI) announced that in the Greater Indianapolis nine-county area, single-family building permits declined by 10% last month with 381 permits compared to 421 in December 2017. This continued decline closes out fourth quarter numbers near -1%, a stark contrast from the 33% increase seen in the first quarter of 2018. Despite the sharp decrease in the fourth quarter, the nine-county area still posted a 14% overall increase in 2018 with a total of 7,072 permits.
“The 2018 permit growth of 14% over 2017 shows us that there is strong demand for new housing,” says Bob Sandberg, incoming Board President and Owner of RLS Building Corp. “However, the yearlong decreasing permit trend clearly shows a weakening in the market at the higher price points (above $250k).
Positive job growth in the area is not matched by a similar growth in area wages, therefore, the demand for new housing units is strongest at the workforce housing price points (starting at $125k), which, due to material price increases, zoning restrictions and development regulations, is the product most difficult for the industry to supply.”
Sandberg continues, “If those trends do not change to provide housing options to match the wages of the jobs created, the slowing of the market experienced in the last two quarters of 2018 may continue into 2019 and beyond.”
Despite the decline in permit numbers throughout the year, those issued in the Greater Indianapolis nine-county region have created a total economic impact of $1,266,480,656 in local income, $287,512,075 in local taxes, and 21,442 local jobs in 2018 (see chart below).