Hey guys, Travis Daggett with Cornerstone Properties. Just want to talk today about analyzing the real estate market in a town or a city based on the permit activity from the building department. We’re going to use as an example a town in Oregon, Lebanon, about 15,000 people there, and talk about what this means particularly if you’re wanting to sell your house. It’s a lot like comparing financial statements or financials from one period of time to another.
Single-Family Residence Permits
First, here, you see single-family residence permits. So what we’re talking about is building a new single-family residents, a new house, which is the most common of course, and something really significant stands out here right from the get go. So you have October 2018, one permit, okay? Now, October isn’t prime building time if we were looking at all the spring or the summer. This would be a lot different. But this is just the most recent, and it still gives a great contrast because a year ago in 2017, there were five times as many houses going up.
Then year to date tells a big story too. So in 2017 at this point, there were 52 permits taken out to build new houses, and this year 14. So again, what is that? It’s about a fourth. The trend from 2017 to 2018 is clearly not building new houses. There can be all kinds of reasons for that based on regulations or laws or urban growth boundary that the city’s restricting. Usually, it’s just supply and demand. So what that typically shows us is there’s not the demand anymore for new houses, so builders aren’t wanting to build more, risking not being able to sell it.
Selling Your House
So what does that mean if you want to sell your house? Well, it means that there’s going to be probably less demand for your house because it looks like there could very well be a glut, an oversupply of houses, which drives the price down and increases. Well, it takes longer to sell, and it’s harder to sell your house in that kind of a market. Now here we have two family residence, which would be a duplex, and you see something a little bit different there. It looks like people are building duplexes a little bit more, so maybe they’re seeing that trend going on a little bit, and that would seem to reflect dropping income of people or ability to afford housing because they’re having to rent a duplex instead of buying their own house.
Multifamily residence. This would be a triplex or greater. So again, the same idea there. Then look at this. So, instead of building new, people are remodeling. So again, there’s a financial decision, right? Building new versus remodeling. Of course, on one hand, people tend to remodel when they have the money. They don’t when they don’t, so that’s a good sign financially. Also, though sometimes, people aren’t able to sell, and so they’re remodeling and staying rather than selling. They could also be remodeling and in the hopes to sell. So that could go a number of different ways.
Accessory structures. Here, that could be adding onto their house. That can go a lot of different ways. This is interesting too just to see what’s going on with the businesses. They’re pretty much the same. So that can give you an indication of what’s going on with the town and growth or decline. Manufactured homes are decreasing. The rest of this doesn’t tell us a whole lot, and a lot of these are pretty similar year on year.
Then there’s some valuation on the houses. So you see here the year to date, a huge difference, two million, 11 million, because there’s just not near as many houses being built. A multifamily, there’s more of those going on, like we talked about. So this is just putting some dollars to units up above. Then this is a summary. Then this actually gives you the specific addresses and the value they associate with each of them.
So I hope that explains what you can tell from the building permit activity. That’s just for free from the city. I can tell you a lot, particularly if you’re wanting to sell, if it’s going to be easy or hard to sell, fast or slow to sell. What kind of price you’re going to be able to get if you’re going to need to fix up your house before selling it, or if you think you have a good shot of just selling it as it is. Hope that helps. Any questions on this or anything else, just contact us. Give us a call. We’d be happy to talk to you about it. Thanks.