December Residential Permit Snapshot

Hi everyone, below are the updated permit numbers through December. But first…

Poll Follow-Up

Back in July, we sent out a poll question about where the 10-year treasury yield would be in a year. The leading response was 3.5 - 4.0% with 21% of the vote, followed by “over 5.5%” and “under 3%”, with each getting 18%. Halfway through, the 10-year is sitting at 4.091% as of this writing.

The range of 4.0 - 4.5% was the least chosen at just 6%. If it holds in that range, we’ll publish the names of those who selected it so we can all reach out to them for investment advice (kidding - we will maintain their confidentiality).

Single Family

The trailing 12-month single family count bottomed out in June at just under 20k and has bounced back up as the low late ‘22 numbers fall out of the count.

Our expectation is that, after the January & February ‘23 numbers drop off, the trailing-12 will settle in between 26k & 27k, which is in line with the long-term average. XHB (SPDR S&P Homebuilders ETF) continues to hover near all-time highs.

Multifamily

Multifamily permits pulled back a little bit as the trailing12-month count dropped to 20,912. That's mostly due to the monster number from December ‘22 of 3,705 falling out of the count.

Remember, these are approved units, not under construction. There are plenty of projects out there waiting for some combination of rental rate growth, construction cost reduction and more favorable financing availability/cost to put their projects back in the green and on the road to construction.

The FTSE NAREIT Equity Apartments Index appears to continuing mostly sideways in a slight downtrend.

Combined

The combined trailing 12-month permit count dipped slightly from last month, which we can attribute to the lower multifamily count. It was nearly offset by the improved single family numbers but not quite. It’s still running well above the long-term average, again, mostly due to the continued high multifamily numbers.

Thanks for reading, as always, please reach out with anything we can help you with.

Until next time,

John & Ramey