Everything’s Bigger in Texas: The Lone Star State Leads the Nation for Second Straight Year in Single-Family Permits
The Lone Star State takes the prize, according to our revised ranking of metro areas that pulled the most single-family permits during 2012. Houston and Dallas remained the front-runners for the second year in a row, at numbers one and two respectively. Phoenix gained some ground, rounding off the top three. The Southeast ramped up activity, with 7 metros placing in the top 20 list.
Source: US Census Bureau, John Burns Real Estate Consulting
Texas metro areas comprise 25% of our list. The following conditions in these cities provide a perfect opportunity for builders to capitalize on the market recovery:
- Double-digit percentage gains in previously owned home sales. All five of the Texas metros that made our list have experienced double-digit percentage gains year-over-year of existing home sales.
- Restricted resale sales inventory. Houston, Dallas, and Austin all have resale inventory below four months of supply (MOS), with San Antonio and Fort Worth also below equilibrium levels.
- Rising demand. Like most metros, there is pent-up demand of potential buyers that put off purchasing during the economic downturn.
- Government regulation. Builder-friendly land use regulation laws allow new permits without much bureaucratic delay.
Houston’s permit activity more than doubled that of the runner-up, Dallas. Builders are generally looking to place additional inventory wherever possible, especially as new home inventory hit a 7-year low of less than 2 MOS. In addition, the concentration of energy-related industries has drawn many individuals to relocate to the area.
Oklahoma City made the largest year-over-year jump in our ranking, from number 26 last year to number 15. Their growth can be attributed to the booming oil industry and stable growth in the agricultural and manufacturing sectors.
Although Texas topped the absolute volume of permit activity, it fell short of placing in our list of fastest-growing MSAs.
California had a strong year in housing, but the state did not pull the most permits in 2012 in absolute terms. However, California did make the list of fastest-growing MSAs, placing 4 in the top 20.
Source: Census Bureau, John Burns Real Estate Consulting
In terms of year-over-year growth, Bakersfield, California tops the list. Bakersfield is an oil and agricultural hub in central California. Lots in this market have been selling for large discounts over the past year, and the market is starting to come out of a period of about five years of historically low permit activity. Builders in this market have picked up on all these trends and have ramped up permit activity year-over-year.