The numbers are in for 2013, and most folks in the residential market, including myself, did not expect to reflect on the past year’s permit numbers with confusion and concern. With 2013’s prediction of much higher numbers, I did not foresee myself sitting here looking at 2014 with trepidation.
But when I think about it, why are we surprised? Is it because we completely expect this market to provide us with 25,000 – 30,000 permits per year? Or is it that we increased 60% from 2011 to 2012? Noted, the latter looks like a great statistic until we understand that the numbers behind the stat are 7,389 permits in 2011 to 11,859 permits in 2012, perhaps not “killing it”. Here is some other (nerdy) data to absorb.
- According to the HBACA there were 12,433 single family permits in 2013.
- According to Ben Sage, from Metrostudy there were 9,454 lots paved last year.
- Those of you that play the permit game with Belfiore Real Estate Consulting the range last year was 13,640 – 22,500. The median was about 17,250.
Admittedly I fall in the group above the median, which explains why I am neither a statistician, nor a prognosticator. Even more concerning is that we all felt that we were bound to increase at least another 45%, just as unsustainable as the dysfunctional years of the mid 2000’s.
I am developing a more simplistic view when I look at data and attempt to update business plans and internal projections. More (nerdy data) – part two:
- Last year Silver Fern developed about 10% of the market, which is historically where we have been. This looks like a great statistic until we look at the actual number of lots developed. Not “killing it.”
- The term “falling knife” when used in conjunction with land prices and housing sales prices isn’t mentioned in conversations.
- Generally, we are not on the down slope in the great curve of cycles; although there are a lot of “experts” who can give too many reasons to count as to why we are in for another disaster. Theses reasons span from things we cannot forecast to things that are completely out of our control (interest rates, world political stability, the fed cutting off infusion of capital, invasion by extra-terrestrial beings that will derail the fragile economy for starters).
So in conclusion, here is to a happy-and-slightly-better-than-2013 2014, as this seems to be the new goal setting strategy for our business. If anything can be learned from this, it is simply that the old axiom proves quite true today; “Hindsight is 20/20.”
John Fortini
Author’s Note: My forecast for 2014 is 15,250. I can’t wait to reflect a year from now.
