Number of building permits on the rise to meet demand for more housing
Greeley Tribune (CO), 2014-08-03
Aug. 03 --Recent years have seen economic expansion in Greeley and, with it, a larger population. The city's housing capacity, though, has remained more or less stagnant.
The number of building permits issued in June may be a step toward correcting that problem.
From 2010-14, Greeley's vacancy rate dropped by 5 percent. Between 2010-13, the city's population grew 4.8 percent.
" Greeley , before the recession, really had a high inventory of housing, especially single-family residential. With the recession, that proved to be an oversupply at some level, and so it took a while for that to get absorbed," said Brad Mueller , community development director for the city of Greeley . "We're now in a position where the opposite is the case. Now, the demand for housing has increased, as the economy has improved overall. Developers are responding to get both single-family and multi-family out of the ground."
During the last year the city has seen a marked increase in applications for building permits for single- and multi-family homes.
Comparing June 2013 with June 2014 , the number of all building permits issued by the city jumped 69.7 percent jump. This year to date, in comparison with this point last year, has yielded an 87.9 percent increase. The year to date values for single-family permits alone show an even larger increase of 236.5 percent. Multi-family permits for the year-to-date comparison are up 77.2 percent.
Bruce Biggi , economic development manager for Greeley , said part of this recent boost lies in Weld County's burgeoning economy and expanding industries such as oil and gas.
"Basically, an improvement in the economy and the marketplace really is responding to demand for residential housing," Biggi said. "I think the oil and gas industry certainly brings in a significant amount of employment and each and everyone of those employees has a housing need. In addition to that, our agricultural sector is very strong, as well."
For local builders like Jamie Baessler of Baessler Homes , the area's economic growth has led to a steady increase in business and, therein, building permits.
"We're on pace for another record year, which we've had records the last three years," Baessler said.
The owner and president of the custom, single-family home-building company also said his company sees the demand for housing firsthand in their clients.
"I think the one quote that we had from a customer, this would have been about three months ago, it sounded like they had put in a couple of offers on existing homes and in the end, there were competing offers on every one of them and they didn't win any of them," Baessler said. "They were just excited to be able to sign a contract and not have to compete for it."
With the vacancy rate for the city hovering just more than 3 percent, this need for housing growth isn't going anywhere.
"Probably for the immediate future, I'd say it's probably the prediction would be that the marketplace will remain fairly strong," Biggi said. "I would say that most of the demand you're seeing now is probably coming from growth in our oil and gas, agriculture, transportation and machinery manufacturing industries."
Mueller stressed these core industries always have been key to Greeley's economic and cultural health. Growth in these primary industries leads to expansion on all levels, such as retail and commercial businesses, all of which, he said, are experiencing "steady growth."
"As new industries come to town, or existing industries expand, the development is meeting that need," Mueller said. "One of the great things about the development trends we've seen lately is that they're happening city-wide, so that means that every neighborhood within the city has an opportunity to benefit indirectly through some of the improvements."
Baessler said though competition has increased due to the boost in need, he isn't worried about keeping his business going steady -- a welcome change from post-recession woes.
"It's been such a huge blessing to have a lot of work again," Baessler said. "It's just a whole different set of challenges from four years ago."
Some of the challenges come directly with the blessing, though. The growth in the various industries around Weld County has made it hard to find workers.
"Labor is certainly a big challenge," Baessler said. "We compete for a lot of the same team members."
Also, water shortages in northern Colorado pose a threat to the rapid increase in residential home-building, as the supply and demand for water are seemingly not on the same growth chart.
"We're very blessed with land in northern Colorado . A lot of places we could build at some point, but water is going to be that bigger issue," he said. "We're going to be overwhelmed on the number of people coming into northern Colorado and just demand on our water supply."
Although Biggi said the increased demand on utilities and infrastructure is always a concern with growth, the city is prepared to handle it.
"For the city, oftentimes it's difficult for a community to provide the infrastructure needed for rapid rates of growth," Biggi said. "Fortunately for us, we have, as a community, the ability to really absorb a significant amount of growth."
Now that the number of permits is surging to meet the need, Mueller said he thinks the city is on pace to grow the vacancy rates and bring the supply up to speed with the demand.
"I think it's fairly consistent at this point," Mueller said. "Everybody's in the mode of catching up with the demand."
With the demand for housing still high, the prices are on the rise.
"Usually the general theory is that supply and demand will set the market price," Biggi said. "If there is excess demand to supply, there's an upward pressure on prices."
Baessler said that though his company is projected to build only five more homes than it did in 2013, it will bring in about $6 million more.
And the price hike isn't just for single-family homes. The average rent for a two-bedroom apartment in Greeley has risen from $647 per month to $712 , according to the City of Greeley's 2014 Multi-Family Housing Vacancy Survey .
However, despite the current scarcity of vacancies, Mueller said he is confident that the current economic growth will help create an equilibrium between supply and demand while still keeping living conditions stable for current residents.
"New development brings with it both opportunities and challenges, and that's always true," Mueller said. "One of the things that we ensure through the development review process is that there are adequate services in place for any new development that does come so that those new service demands aren't being borne on the back of current residents, but rather are happening proportionate to the new development. It's a system of making sure that growth is paying for growth, and when we do a good job of that, everybody benefits."
Baessler said that his company believes in growing organically, but not sacrificing its current service and product standards, it will do its best to accommodate the need in the community.
"Ultimately we can keep up, but it's going to be a challenge," he said. "We're going to do our part to participate."
"The marketplace really is responding to demand for residential housing,
-- Bruce Biggi , Greeley's economic development manager
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