Typically building permits are required for everything from demolition to an oversized tent, and as a result, they provide a source of local industry data. Information on the property type (residential or commercial), the neighborhood, and the cost are all included in permit data, although these details will vary by region.
We recently published a report featuring Q1 building trends in the Austin, Texas area, as well as two other Canadian cities. We found that the number of permits in the regions was increasing, but the average value of these permits had decreased significantly. To get to the bottom of this trend we asked some expert builders in the area why they think this is happening. Let’s look at building permits in Austin, findings from the report, and then see what our experts had to say.
Building in The Beautiful City of Austin
Building permits exist to regulate general health and safety around building standards while protecting the overall interests of the community. They help the industry understand the amount of building activity in a particular region, and the value of those projects.
The City of Austin is currently taking measures to better protect and serve builders by allowing them to apply for building permits online. A list of building and construction permits issued in Austin can be found here.
Our team used this data in combination with our own proprietary data set to generate local Q1 insights on everything from labor costs to the impacts of COVID-19 on builders in the Austin area. One of the most interesting findings from the report was that there was a 7.8% year-over-year growth in the number of permits issued in the first quarter of the year; however, the average value decreased by 20%. This trend wasn’t uniform, and the increase was only present in the Central, East, and Southeast Austin neighborhoods. Similarly, this trend was more pronounced with additions and remodels than with new builds, but was present in both sectors.
What do these building trends tell us as builders? Could affordable housing be on the rise? Were there more simple renovations in Q1 because of a weather event? While we expect that these numbers will change drastically in the second quarter of the year because of COVID-19, we wanted to understand what was driving the building permit activity just before the shutdown.
Experts Weigh in on Permit Trends in Austin
To help us understand why average permit value decreased we asked three expert builders in Austin: "Why do you think the average permit value decreased in Austin in Q1?"
Expert 1: The Size of Residential Projects May Be Decreasing
We first spoke with expert builder Shawn Nikah of Inside Out Remodeling, based out of Austin, Texas. He shared his thoughts with us on recent building permit trend data in Austin:
“we’ve seen 10% appreciation in home values over the past year. Maybe homeowners have hit a tipping point in terms of the equity they have and their access to financing. More equity means more work being done but the size of the projects might be smaller due to a different type of financing.”
Shawn hits on the driving force behind permits, and that’s the nature of the build. With the trend being more pronounced in additions and remodels than new builds, he just may be on to something.
Expert 2: These Trends Were Already in the Pipeline
Next, we asked Jarred Gossett of Gossett & Co., an expert residential contractor in Austin. Here’s what he had to say:
“The first thought is that builders are cutting back on their homes to offer cheaper prices. I'm not surprised permits went up. (…)The economy is and was hot, and there is a lag usually with permits from what I've seen, as these are projects that were already in the oven prior...There are so many factors in play.”
These are wise words, and remind us that in the building world trends often play out over longer periods of time.
Expert 3: We Have to Consider Neighborhood Trends
Bryan Kaplan, highly-renowned building expert and owner of Construction Consulting, also gave us his thoughts on these Austin permit trends:
“Knowing the gentrification happening in Austin's east end, the home sizes and values are cheaper than Central and South ATX which are HOT and expensive real estate markets.”
Bryan directs our attention to the fact that this trend wasn’t seen uniformly across the Austin area. He points out gentrification in the East, for example, a neighborhood in which the increase was observed.
You can follow Bryan on Instagram here.
If you’re in the Austin area and would like to be part of our next quarterly report, reach out to firstname.lastname@example.org
All screenshots taken June 2020 by author.
Screenshot 1: Via RenoRun Report: Q1 Austin Building Trends
Screenshot 2: Via Inside Out Construction
Screenshot 3: Via Construction Consulting