Recently released housing market figures all signal a promising trend: the development and construction industries are truly on the up.
The latest US Census Bureau/Department of Housing and Urban Development report for New Residential Construction showed that building permits have surged for both single family and multifamily units in the last few months. Home building permits reached the highest level in more than 5 years in October (to an annual rate of 1.03 million), while applications for multifamily permits rose by more than 15 in the same month and by no less than 20.1% in September. Figures for housing starts and completions were postponed until December 18 as a result of the government shutdown, but I expect these to show a similar upward trend.
As the housing construction market gains strength, lack of supply also continues to boost house prices. In fact, Bloomberg reported last week that property values in the 3rd quarter of this year enjoyed their sharpest rise in more than 7 years. And the latest S&P/Case-Shiller Home Price Indices, which are the leading measures of U.S. residential real estate values, also showed significant improvements over the last year. The composite index of 20 metropolitan areas increased by 13.3 percent in September from a year ago, which is the biggest jump since early 2006.
All of these statistics support our observation that the construction industry is a tailwind for the steady recovery of the national economy.
With all the signs pointing to an improving development and construction industry, it’s a perfect time for developers, investors and lenders to review their due diligence procedures for development projects. In order to identify any project-killing issues before committing a substantial amount of time and money towards a development, it’s critical to perform an appropriate amount of development due diligence.
To find out more about the various elements of an effective due diligence process, including Zoning Reports, Land Surveys, Phase I Environmental Site Assessments and Geotechnical Investigations, and how this can help you avoid development pitfalls, tune in to Partner Engineering and Science’s webinar Development is Back! Mitigate Risk with Due Diligence on December 12, 2013. You can register here.