The housing double dip

As analysts debate the possibility of a double dip in Gross Domestic Product (GDP), many would argue that the economy cannot move into a sustainable recovery without improvement in housing. But as of now, single family housing permits are down in 49 of 50 states compared to last year, and permits are on track for a double digit annual decline. If this happens, 2011 will become the weakest year on record for single family housing permits.

The current attention of the public and politicians is on jobs, jobs, and, of course, jobs. But another indicator - single family permits - is turning more negative with every passing month. While analysts debate the possibility of a double dip in Gross Domestic Product (GDP), many would argue that the economy cannot move into a sustainable recovery without improvement in housing. As of now, single family housing permits are down in 49 of 50 states compared to last year, and permits are on track to record a double digit annual decline when final figures are in for 2011.

According to the U. S. Census Bureau, year-to-date single family permits through July are down by 13.7 percent so far in 2011. This dip reverses a very modest gain in 2010, which came after four straight years of decreases (see table).

The peak year in this cycle for the number of single family permits was 2005, when 1.7 million single family units were authorized. In 2010, there were 447,000 single family permits, a 73 percent decrease from the peak. If the remainder of this year continues weak, 2011 may see fewer than 400,000 units, breaking the record for all time low (441,000) set in 2009.

Only one state spared

Single family permits year-to-date through July are down in all states except North Dakota, a state that also leads the nation in the rate of job creation. Permits are up by 2.7 percent in North Dakota. The deepest decline (-40 percent) is in Vermont. Other states with decreases of twenty-five percent or more include Maine (-30 percent), Idaho (-29 percent) and New York (- 25 percent).

Among the Western states, the largest percentage decline is in Nevada (- 23 percent), followed by New Mexico (-18 percent), Arizona (-17 percent) and Oregon (-16 percent).

Although Texas will add more new jobs this year than any other state, the Lone Star State has seen single family permits decrease by 4,900 year-to-date in July, more than any other state, and more than twice as many as second-worst California (-2,300).

But in spite of a dip in single family permits of 11 percent this year, Texas has still added far more (38,000) than any other state. Florida is in second position with 19,000 new single family permits.

Multi-family permits are up

As single family housing problems such as foreclosures persist, apartment living becomes more attractive, if not a necessity. Multi-family activity has increased in 33 states. Nationally, permits for multi-family housing units are up year-to-date by 25 percent, with just over 100,000 units authorized.

The largest year-to-date percentage jumps are in Rhode Island and Louisiana (gains of 250 percent). While Vermont saw the largest percentage decrease in single family permits of any state, multi-family permits there are up by 170 percent. Oregon was the only other state to post multi-family permit gains of more than 100 percent, with an increase of 114 percent.

The greatest number of multi-family permits authorized was again in Texas (more than 16,000), an increase of 62 percent.

Multi-family permits increased year-to-date in every Western state except Idaho, New Mexico and Wyoming.

Total permits down in 36 states

Combining single family and multi-family permits, residential permits were down year-to-date by 4.9 percent at the national level, and down in 36 states. Due to the strength of multi-family permits, total residential permits increased the most in Louisiana (up 14 percent).

Among the Western states, total permits were up in Colorado (6.7 percent), Oregon (3.6 percent), California (3.5 percent) and Texas (2.4 percent), and down in all other states in the region.