Housing permits improved this year as interest rates remained low, but as interest rates jumped to about 4 percent recently the rising permit trend is expected to level off. What does that mean for 2014? In 2007 and 2008, before the great fall the typical 30 year mortgage rate was about 6 percent so why does 4 percent frighten people?
The Commerce Department said last week that housing permits rose 6.9 percent in September, to the highest number since October 2008.
Some call it the crash of 2008; by March of 2009 stock prices hit bottom and the housing market follow suit. By the end of October 2008, single-family housing permits in Chesterfield had dropped from 1266 to 806, a whopping 36 percent, and that was just the beginning. Builders were on the ropes and were not exactly sure what would happen next.
What happened next was single-family home permits declined even further in Chesterfield until reaching the bottom in 2010 – down 55 percent from 2007.
Since then the county has been experiencing a slow climb, only slightly in the years to follow but by the end of October this year, permits had rebounded to just 8 points below 2008 levels.
According to Chesterfield County Inspection Department data, building permits have gained 26 percent from this time last year. The year-to-date number of permits issued by October in 2012 was 718. Permits issued have improved to 911 this year.
According the National Association of Homebuilders, “This is the kind of signal we’ve been looking for, with single-family starts and permits up or holding steady across every region in the nation,” said NAHB Chief Economist David Crowe.
The housing market has seen brisk sales through the third quarter of this year, but there are signs that severe inventory crunches from earlier this year are slowly beginning to ease as rising prices give more sellers the incentive to test the market.
Nationally, median asking prices [for new homes] dipped by 0.2 percent from August to $199,500, though that was still 6.4 percent above last year’s earlier median asking price of $187,500.
Move-in rates in Chesterfield will always be a little lower than the permit number. Certificates of Occupancy (Chesterfield deems home ready to move in) issued at this time last year was 649 (October year-to-date) and in 2013 there were 771 homes ready for a Barca lounger, a flat screen TV and invitations to watch ESPN.