In which metro areas has building permit activity returned to the pre-bubble level?
Building permits have trended up during the past several months indicating that U.S. residential construction will likely strengthen in 2015.
Since building permits are an important leading indicator for developments in the economy, it is worthwhile to take a closer look at the number of building permits at the metropolitan level. The visualization below tracks the number of building permits issued in the 100 largest Metropolitan Areas for the following four periods:
2000 – 2003: Pre – Bubble period,
2004 – 2006: Bubble period,
2007 – 2011: Bust period,
2012 – 2014: Recovery period.
The first page of the visualization shows the annual growth of building permits for each of these periods. We see that:
2000 – 2003 (Pre – Bubble period):
Eight out of ten metro areas had positive growth while Portland – South Portland, ME had the highest annual growth (31.3%). In contrast, building permits decreased by 21.1% in Greensboro – High Point, NC.
2004 – 2006 (Bubble period):
The number of metro areas with positive annual growth of building permits dropped to one out four metro areas. Baton Rouge, LA showed the highest growth (32.3%) while Toledo, OH had the largest decline (-30.8%).
2007 – 2011 (Bust period):
None of the 100 largest metro areas exhibited annual growth in this period while Modesto, CA was the metro area with the largest decrease (-45.5%).
2012 – 2014 (Recovery period):
Three out of four metro areas had positive annual growth while Grand Rapids – Wyoming, MI took the lead with annual growth of 48%. However, Scranton – Wilkes – Barre – Hazleton, PA had the largest decrease among the 100 largest metro areas (-39.3%).
The second page of the visualization shows the change in the median number of building permits in each period compared with the pre – bubble period (2000-2003). The data seek to answer the question: In which metro areas has building permit activity returned to the pre-bubble level? Comparing the median number of the building permits during the pre – bubble period and the following periods, we observe that:
Bridgeport – Stamford – Norwalk, CT, El Paso, TX, and Shreveport – Bossier City, LA had permit activity that exceeded the pre-bubble period in each of the following three periods. For example, in El Paso, TX the median number of building permits was higher by 15.8% in the bubble period, 16.2% in the bust period and 14.6% in the recovery period compared with the pre-bubble period. Thus, those areas continued to experience solid levels of building permit activity throughout each phase of the cycle.
Austin – Round Rock – San Marcos, TX and Fayetteville – Springdale – Rogers, AR-MO recovered from the effects of the bust period and the number of building permits exceeded pre-bubble levels during the recovery period.
However, Greensboro – High Point, NC, Denver – Aurora – Broomfield, CO and Grand- Rapids – Wyoming, MI were not able to return to the pre-bubble level of building permit activity. For instance, in Grand Rapids – Wyoming, MI the median number of building permits decreased by 43.7% in the bubble period, by 87% in the bust period and by 78.5% in the recovery period compared with the pre-bubble level of building permit activity.
Please follow the tabs in the visualization below and see how much the number of building permits changed in your metro area over the years.
Bridgeport’s high percentages can be explained. The level of building permits during 2000-2002 was very low because of the financial problems in that area. However, in 2003, the number of building permits surged to 1,964 and it reached 3,119 in 2005 because many multifamily units were constructed. In 2010, in an effort to face the bust period effects, the local Housing Authority announced more plans for development and, thus the level of building permits rose again.