Amazing 1st Quarter Building Permit Data from the EDF

During a report about the 1st quarter of 2017, the St. Tammany Parish Economic Development Foundation has once again brought great news to the residents of St. Tammany Parish about the economic health of this area of the Northshore.  Building permits for the year 2017 so far show a year-over-year increase of 23.6% compared to 1st quarter 2016 for a total of 319 building permits. In addition to this exponential increase compared to last year’s 1st quarter, it also showed a 37.5% increase in building permits compared to the 4th quarter of 2016 (last quarter).

Numerous reports have been bringing the news that May, 2016, saw a decrease in housing inventory on a national scale to just a 2.6 month’s supply, so this drastic increase in building permits is excellent news for home buyers who are entering an extremely tight and competitive housing market in search of a home to buy.

Of the building permits issued, 82 of the permits were commercial building permits, which is a 3.8% increase compared to the first quarter of 2016. The St. Tammany Parish EDF also reported that house sales in the 1st quarter netted 761 houses, which is a 3.8% increase compared the previous year, and the average sales price was $238,068, which is actually slightly less than 2016, which was $238,151 – bucking the national trend.

The number of businesses being incorporated during the 1st quarter of 2016 was 777, which was an astounding 61% year-over-year increase compared to the 1st quarter of 2016.

“Every quarter, we report the number of new domestic entities filed with the Louisiana Secretary of State for St. Tammany Parish,” foundation CEO Brenda Bertus said. “The drastic increases in the months of January and March of 2017 from the same months in 2016 show an increase in growth and stability in St. Tammany.”

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New Home Sales Enjoy a 12.2% Increase in May

1st quarter results are reporting an 11.3% increase in new home sales for the first 3 months of the year and a phenomenal 12.2% increase in new home sales compared year-over-year to May, 2016.  April’s home sales numbers increased the total amount of homes sold to 593,000, and the number of total new homes sales is 210,000. More good news for new home sales is that there has been a 2.9% increase in contracts for new homes for the month of May, bringing new home contracts to 610,000.

New home sales numbers are also calculated by a 3-month moving average that advances each month to encompass a new data set.  According to this moving average, new homes sold stood at 616,000, which compared to all post-recession numbers is near the high of 619,000. And, the month of May makes the third consecutive month of calculating 3-month moving averages that new home sales have been over 600,000.

According to a joint report by HUD and the Census Bureau, home inventory is on the rise, increasing from 240,000 where it stood for most of 2016 to 268,000, which averages out to a 5.3-month inventory, which will give home buyers a bit more breating room as they place bids and write contracts on homes for sale.

Builders, however, have gotten the message and a good start on new homes being built.  Homes under construction are up by 6% compared to last year, and completed builder new homes are up by 5% last year for a total of 62,000.  In St. Tammany Parish, building permits have increased by 23.6%, which matches the national reports of not-yet-started homes increaseing by 43% for a total of 53,000 in May.  May, 2016 only saw 37,000 homes-to-be-built.  The southern region saw a 6% increase in home sales during the month of May. Predictions of successful sales of single-family homes in the upcoming months are punctuated by solid builder confidence and tight inventory on existing and new homes for sale.

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A 20% Increase in Home Sales During May

There is absolutely no doubt that the housing market is recovering steadily without any pit stops along the way. As statistics are released each month by multiple agencies, the news is always the same: records are being set, year-over-year increases in new home sales, existing home sales, and all home sales are happening almost every quarter, and the built-up housing inventory of the Recession is in its 103rd consecutive month of year-over-year decreases since the market dropped out in October, 2008.  That last statistic is pretty mind boggling when you think about how bad builders and home sellers alike were suffering, holding onto properties and paying the taxes, mortgages, and expenses on these properties – waiting for the market to turn.

Well, the good news is – it has! May, 2017 is showing the strongest sales numbers for any May in the 9-year history of the RE/MAX National Housing Report – a 20.6%, year-over-year increase of total home sales compared to 2016.  Two other records were also set during the month of May: the average time a home for sale was on the market was only 51 days, and the housing inventory supply shrank to a shockingly low time period of only a 2.6 month’s supply.

What isn’t news and is still being watched by many economists is the average home price increased to $232,500 – the second highest price in the month of May in the history of the report behind the median sales price of $236,062 in August, 2008, right before the Recession. Home prices and rising interest rates have been a concern as home buyers are trying to get loan approvals to being the home buying process.

“In May, we saw an uptick of both loan applications and home sales, which is encouraging in terms of more people getting into the market for homes,” said Adam Contos, RE/MAX Co-CEO. “We don’t expect that the Federal Reserve’s announcement on Wednesday to raise interest rates a quarter of a point will greatly affect the market’s momentum. But housing demand only intensifies the tug-of-war with tight inventories driving prices up.”

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Should I Rent or Should I Own

Do you ask yourself the question should I rent or should I own? If you are looking for a smart investment then owning is the way to go. Here are some things to think about when weighing owning versus renting.
Whether you are renting or purchasing your money matters!  Research where to get the most return for your money. The amount housing prices go up will greatly affect your return.  There are many resources to tap into where you can find great information about retirement, saving for college, investing and online financial services.
Look at a mortgage on a home as a means of saving money. A great advantage for homeownership is the ability to deduct your mortgage interest from your taxable income.

“Another primary advantage is the opportunity to build wealth via earned equity that is not available through renting,” says Daren Blomquist, senior vice president for ATTOM Data Solutions. “We know that home values do not always go up. But over the long term, they have consistently trended higher.”
Many people think of stocks, bonds, savings accounts, retirement accounts and cd’s as solid ways to save your hard-earned income but there can be challenges with these as well.  You might plan on and begin to set away a certain amount of income to one of these investments each month, however a life-changing event such as aging parents, growing children, job loss or health issues can wreak havoc on this plan.

Right now, a mortgage is more affordable than rent.   According to the U.S. Department of Housing and Urban Development, Bureau of Labor Statistics and Realty Trac, fair market rent on a 3-bedroom home is less affordable than a mortgage on a median-priced home in a majority of the counties across America.  Monthly rent takes up 38.6% of average wages where a mortgage only requires 36.6%.  Fair market rents across America are rising faster than the average wages.

Blomquist comments, “Today’s near record low homeownership rate, combined with low inventory of rental property, have combined to push rental rates higher during the housing recovery. In the majority of markets, home price appreciation has been outpaced by growth in rental rates.”
Remember it is not just a financial choice but an emotional choice as well when making a decision on your primary dwelling. Where we live makes a huge difference in our everyday life. From use of space to a lush backyard garden, to the installation of a fountain, outdoor kitchen, firepit, or home pool, Homeowners can enjoy more privacy and flexibility to make changes to their living space.

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