New Construction Permits Reported Low in Flagstaff

Flagstaff's newspaper reported Tuesday that the City of Flagstaff issued only two building permits for single family residences during October. Through October, "just 71 home-building permits have been issued, off by half compared with the first 10 months of 2007."  As reported earlier in this blog, this follows a plunge in home permits in 2007 compared to 2006. Why is this good news?

Because housing inventory must fall before existing home sales improve. If new homes continue to be built, that target gets pushed further and further out. Luckily for Flagstaff, new development of homes had pretty much tapered off by the end of 2006. This has been one of the factors cushioning the drop in our market as compared to Phoenix and many other parts of the country.

As the newspaper article goes on to report, the economic impact on the City of Flagstaff has not been as bad as the drop in numbers of permits would at first glance suggest. The value of remodeling work is down only 9%, and the dollar value of new construction permits issued is high. Most significantly, developers are submitting plans to the City -- showing confidence that there will be a turnaround. They are getting ready for it. Are you?