Multifamily housing starts plummeted again in December 2009, but a rise in permits that same month just might point to an impending recovery. While starts dropped from 7,600 units in November to 7,500 units in December, multifamily permits jumped 20.8 percent in December to 145,000 units, according to data released by the U.S. Commerce Department.
“Permits are up; that is a positive sign,” says Bernard Markstein, vice president and senior economist at the National Association of Home Builders (NAHB). “It shows that these guys do see the need down the road [for development], and if they can get the financing, they will go ahead and start these projects.”
Of course, it’s not time to clink the champagne glasses just yet. It can take up to a year for permits to translate into digging dirt, and NAHB is anticipating an even worse year for construction than 2009, with 2010 year-end projections at 87,000 units compared to 110,000 units started last year. “Not until the second half of the year do we expect things to start to improve,” Markstein says. “In 2011, we are projecting 150,000 starts.”
Dan Kaufman at Atlanta-based general contracting firm R.J. Griffin & Co. certainly feels today’s pain. The senior vice president and division manager is anticipating a more challenging year for his firm than last year, with approximately 600 multifamily starts in ’09 and only 100 starts projected for this year.
“Even though the economy was tanking in 2009, we had three big condo projects that were backlogged,” Kaufman says. “It’s hard to replace a $120 million job right now.”