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Homebuilders end 15-month streak of permit increases

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The central Indiana home construction industry reversed course in October, ending a streak of 15 straight months in which permit filings were greater than the same month in the previous year.

In October of this year, homebuilders filed a total of 375 single-family building permits in the nine-county metro area, the Builders Association of Greater Indianapolis reported Monday. That amounted to a 5-percent decrease from 394 permits filed in October 2012.

The October numbers follow a year-over-year downward trend that started this summer. In July, permits filed were 35 percent higher than in the same month in 2012. In August, permits were 13 percent higher, and then just 8 percent higher in September.

The last time the local market showed a year-over-year decrease was June 2012, when the 419 permits filed were 3-percent lower than the 434 permits filed in June 2011.

Homebuilders nationwide reported a dip in confidence in the market for newly built, single-family homes in October.

“A spike in mortgage interest rates along with the paralysis in Washington that led to the government shutdown and uncertainty regarding the nation’s debt limit have caused builders and consumers to take pause,” said David Crowe, chief economist for the National Association of Home Builders, in October.

The average rate for a 30-year fixed mortgage was 4.23 percent for the week ended Oct. 10, compared with 3.39 percent a year earlier, according to lender Freddie Mac. In August, the rate reached a two-year high of 4.58 percent and held close to that level through mid-September.

For the week ending Nov. 7, the average rate for a 30-year fixed mortgage was 4.16 percent.

Demand should pick up if mortgage rates stay close to current levels, which are not far from historic lows, said Gennadiy Goldberg, U.S. strategist for TD Securities.

“There’s enough momentum in the housing market for the recovery to keep going,” Goldberg said last week. “Slightly higher rates shouldn’t be enough to derail the housing recovery.”

In the Indianapolis area, Hamilton County was the busiest county for homebuilding in October, but also showed the most precipitous drop in permits. Homebuilders filed 156 permits in October, down 16 percent from 186 permits filed in the same month last year.

Marion County filings went the opposite direction, increasing 34 percent to 51. Hendricks County saw a 12 percent loss, to 50 permits.

For the first 10 months of this year, the number of permits filed still outpaced the same period in 2012—up 20 percent to 4,308 permits.

“Although reports indicate a slight decrease in permits from [October], we continue to see a significant increase over last year’s numbers,” said Steve Lains, CEO of BAGI. 

“Forecasters believe that we will continue to see steady increases in 2014.  A slight decrease from last month was expected because of the time of year, but what’s ultimately important is the year-to-year overall increase which is moving in the right direction in our area,” Lains said.

Recent activity in central Indiana still pales compared to pre-recession numbers. More than 1,220 permits were filed in the area in October 2005.

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  1. Cramer agrees...says don't buy it and sell it if you own it! Their "pay to play" cost is this issue. As long as they charge customers, they never will attain the critical mass needed to be a successful on company...Jim Cramer quote.

  2. My responses to some of the comments would include the following: 1. Our offer which included the forgiveness of debt (this is an immediate forgiveness and is not "spread over many years")represents debt that due to a reduction of interest rates in the economy arguably represents consideration together with the cash component of our offer that exceeds the $2.1 million apparently offered by another party. 2. The previous $2.1 million cash offer that was turned down by the CRC would have netted the CRC substantially less than $2.1 million. As a result even in hindsight the CRC was wise in turning down that offer. 3. With regard to "concerned Carmelite's" discussion of the previous financing Pedcor gave up $16.5 million in City debt in addition to the conveyance of the garage (appraised at $13 million)in exchange for the $22.5 million cash and debt obligations. The local media never discussed the $16.5 million in debt that we gave up which would show that we gave $29.5 million in value for the $23.5 million. 4.Pedcor would have been much happier if Brian was still operating his Deli and only made this offer as we believe that we can redevelop the building into something that will be better for the City and City Center where both Pedcor the citizens of Carmel have a large investment. Bruce Cordingley, President, Pedcor

  3. I've been looking for news on Corner Bakery, too, but there doesn't seem to be any info out there. I prefer them over Panera and Paradise so can't wait to see where they'll be!

  4. WGN actually is two channels: 1. WGN Chicago, seen only in Chicago (and parts of Canada) - this station is one of the flagship CW affiliates. 2. WGN America - a nationwide cable channel that doesn't carry any CW programming, and doesn't have local affiliates. (In addition, as WGN is owned by Tribune, just like WTTV, WTTK, and WXIN, I can't imagine they would do anything to help WISH.) In Indianapolis, CW programming is already seen on WTTV 4 and WTTK 29, and when CBS takes over those stations' main channels, the CW will move to a sub channel, such as 4.2 or 4.3 and 29.2 or 29.3. TBS is only a cable channel these days and does not affiliate with local stations. WISH could move the MyNetwork affiliation from WNDY 23 to WISH 8, but I am beginning to think they may prefer to put together their own lineup of syndicated programming instead. While much of it would be "reruns" from broadcast or cable, that's pretty much what the MyNetwork does these days anyway. So since WISH has the choice, they may want to customize their lineup by choosing programs that they feel will garner better ratings in this market.

  5. The Pedcor debt is from the CRC paying ~$23M for the Pedcor's parking garage at City Center that is apprased at $13M. Why did we pay over the top money for a private businesses parking? What did we get out of it? Pedcor got free parking for their apartment and business tenants. Pedcor now gets another building for free that taxpayers have ~$3M tied up in. This is NOT a win win for taxpayers. It is just a win for Pedcor who contributes heavily to the Friends of Jim Brainard. The campaign reports are on the Hamilton County website. http://www2.hamiltoncounty.in.gov/publicdocs/Campaign%20Finance%20Images/defaultfiles.asp?ARG1=Campaign Finance Images&ARG2=/Brainard, Jim

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