Residential building permits plunge in NYC
Residential building permits plunge in NYC
Via Crains New York
Published: November 26, 2008 – 2:30 pm
In a sign residential construction in New York City is grinding to a virtual halt, the number of housing units authorized by building permits fell 70% in October compared with the same month a year ago.
The number of permitted units citywide fell to 778, from 2,532 a year earlier, according to data released Wednesday by the U.S. Census Bureau. The number of buildings covered by the permits fell 50% to 130.
Compared with September, the falloff was also stark, with permitted units falling by 33% and the number of buildings granted permits dropping 16%.
“With no availability of credit, why would anybody be moving forward on projects?” asked Steven Spinola, president of the Real Estate Board of New York.
Other factors leading to the decline in permits include the end of the 421-a subsidy program and the fact that a glut of units are already on the market as a result of the faltering economy. Banks have also tightened lending standards for mortgages, making it harder to find qualified buyers.
For the year, permits are down 33% when compared to the first 10 months of 2007, though units authorized by the permits are actually up 21%. This is largely due to changes in the 421-a tax subsidy program that went into effect July 1 and led to a flurry of activity in June.
The October rate of falloff in the city actually outstripped that of the nation. Across the country, units authorized by residential permits plunged 12% in October when compared with the month before, and 40% versus October 2007, according to the U.S. Department of Commerce. That’s a stark difference from last year, when residential construction in the city continued to boom despite a nationwide decline.
Permits are considered a key indicator of future building activity. Another indicator of residential construction activity—condominium offering plans— also plummeted in October, a sign that developers are pulling the plug on existing projects.
The slowdown appears to be taking a toll on construction workers. The city lost 900 construction jobs in October, according to a seasonal adjustment of state Labor Department data by real estate firm Eastern Consolidated.
And multi-family builder confidence plunged to record lows in the third quarter of this year, according to the latest survey from the National Association of Home Builders, which said builder confidence had been shaken by the credit crunch and market turmoil.
“We know that it’s just really difficult to get credit so we’re not even trying,” said Matthew Goldfine, president of Excel Builders and Renovators in Brooklyn. The company has abandoned its development work for the time being and is riding out the downturn by focusing on smaller construction and renovation projects.