Tuesday, December 14, 2004

Permits decline 20% from a year ago

Neal Gendler, Star Tribune

Residential construction permits in November were off 20 percent from November 2003, the third consecutive month of a double-digit decline .

But Twin Cities-area builders say boom doesn't seem to be turning into bust.

For one thing, 2004 is expected to be the areas' second-strongest in recent memory. For another, the number of new units planned in November was off only 11 percent, as attached or multifamily housing accounted for 54 percent, or 777, of the 1,449 units planned. Still, last month's decrease came after a 19 percent drop in permits in October and a 15 percent slide in September, compared with the same months of 2003. But as several builders pointed out, 2003 was a record year.

"I would want to look at the first quarter of 2005 before drawing any conclusions," said Rick Kot of R.A. Kot Homes in Apple Valley. Kot, president of the Builders Association of the Twin Cities, which released the numbers Monday, said he'd be concerned if sales stayed down early next year.

"I just think it's a little short-term blip ... or breather" in the market, said Lowell Pratt of Pratt Homes in Vadnais Heights. "We haven't experienced any kind of a slowdown." Todd Stutz, president of Roseville-based Rottlund Homes, said builders increased their inventory in the first part of the year. He said the Twin Cities has many large national builders whose deep pockets allow "a significant amount of risk in building homes that are not sold."

Last month, David Seiders, National Association of Home Builders chief economist, said he expects housing starts next year to fall 4.2 percent.

Pratt agreed, saying a reason is "simply that a lot of the people who are out buying have bought in the last two or three years. ... I see the Twin Cities housing market remaining by and large healthy."

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