NJ’s Housing Recovery Gains Momentum [AUDIO]
There's more proof that New Jersey's housing recovery is moving in a positive direction.
Homebuilders across the Garden State obtained 2,261 building permits, or authorizations to begin construction, in July. This was the third highest monthly total in five years. So far in 2013, residential permit approvals are running about one-third, or 32.3 percent, ahead of the same period last year.
Residential construction in New Jersey is the strongest it's been since August 2007.
"About half of all of the approvals are for multiple family dwellings, like rentals and condominiums. A little bit less than half reflects starts on single family construction," said Patrick O'Keefe, Director of Economic Research at Cohn Reznick. "The pattern that we see is that builders have gained confidence in the state's housing market. They are undertaking the construction in anticipation that there will be buyers for these homes and renters for the apartments toward the end of the year."
Multifamily construction accounted for a disproportionate share of the rebound.
"The primary driver of the growth in multifamily housing is increased demand," said O'Keefe. "Younger adults today are not sure how long they will be staying in any one community because their jobs require more movement. So, they're more likely to rent rather than buy and builders are responding to that, increasing the supply of rental apartments across the state."
Despite the gains, permit approvals remain more than one-third below 2005's pre-meltdown peak.
"New Jersey actually came out of the housing meltdown more slowly than the country on average. But, over the last 12 months, we've seen some acceleration in construction and the permits. For all the progress we've made, we are still well below where we were in 2005. So, we're making progress, but we still have a long way to go," said O'Keefe.
Based on the residential permit data so far in 2013, housing construction in New Jersey is poised to accelerate.
"Home building activity will be increasing in New Jersey. During the period of the meltdown, we were building very few homes, so there is pent up demand to which the market is responding. The demand is there and the supply will rise to meet that demand. That being said, we are still a high-cost state and interest rates have begun to move upwards, which will be another constraint on the rate at which housing and home building in New Jersey recovers," said O'Keefe.