Hi everyone, I’m trying out a new format to send out updated permit counts, hope you enjoy it!

We recently had the leaders of the Colliers Mortgage team in our office to discuss all things lending and the topic of a roughly 18-year real estate cycle was brought up. It prompted me to look back at the historical data to see if that timeframe held water with regards to permits. The previous peak in the combined trailing 12-month count was in March 2005 (65,941) while the most recent peak was in March 2022 (53,619), exactly 17 years apart. The previous ‘trough to trough’ cycle lasted from 1990 to 2010 or 20 years.

Single Family

Single family permits pulled back a little from the March count but is still an improvement over the 1,000 - 1,400 we saw monthly from September through February. If this number can continue to come in around 2,000, we should see the trailing 12-month count bottom out in late summer or early fall.

Multifamily

Multifamily permits came in at 1,414 for the month, which is below average for the last 12 months, but as I’ve said before, multifamily permits are choppy from one month to the next so trends take a little longer to identify. The trailing 12-month count ticked up to another record high. Based on a question I received last month, I’d like to clarify that these are newly approved permits, not pulled. Based on the current lending environment, a higher percentage of these than normal will likely stay in the “authorized, but not started” category. If you know of a good source to find counts for that category for Phoenix specifically, please let me know.

Combined

Combined permits came in at 3,287 for the month and 42,606 for the trailing 12-months, both roughly 19% off the same numbers from a year ago. The T12 count is ~20% off the most recent peak.

Calendar Year Random Stats

If we stick to calendar years, the most recent peak was in 2021. The average combined permit count from peak to peak between 2005 and 2021 was 31,533. The average over the previous trough to trough from 1990 to 2010 was 36,886. How many years between 1990 and 2022 did we permit between 31,000 and 37,000 units? Four - 1994, 1995, 2018 and 2019.

From 1998 through 2002, combined permits hovered between 45,000 and 48,000 before jumping to 54,860 in 2003, 65,259 in 2004 and 69,230 in 2005 (I’m told the discrepancy between annual & monthly counts is due to not all communities reporting monthly). The counts over the last 3 years look similar to the numbers from 1998 to 2002 and it wasn’t until we pushed over 65,000 in two consecutive years that we tipped over the edge and began to drop. The combined permit count will be down this year but what we’re experiencing now is not the same as what led into the GFC.

Thanks for reading, until next time,

Ramey