May 27, 2018

Why New-Home Buyers May See Longer Waits

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Why New-Home Buyers May See Longer Waits

Homebuilders across the country say that delays they face receiving building permits from their local governments are stalling projects.

Builder Jared Phifer in Denver says that the process can take up to eight months.

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The delays are “almost making us go bankrupt,” Phifer told The Wall Street Journal. “We’ve had to put a halt on so many projects that I’m in the process of getting a loan for $150,000 to cover all of our expenses.”

City governments are working with smaller staffs, after many reduced staff levels during the recession. That shortage could explain some of the long wait times builders are facing to get permits and other approvals.

Single-family developers reported a median delay of seven months in 2015, up from four months in 2011, according to the National Association of Home Builders.

In markets heating up such as Florida and California, permits are taking six to eight months, compared to the typical two to three months they once took, says Bradley Gaskins, chairman of the Codes and Standards Committee of the American Institute of Architects.

Those delays come as inventory levels are tight in many markets heading into the spring buying season. What’s more, the delays are costing “developers thousands of dollars in employee salaries, interest on loans, and other items,” The Wall Street Journal reports.

“It increases the costs to the consumers because ultimately all the costs are passed onto us,” Gaskins says.

Source: “Home Builders Slowed by Permit Delays,” The Wall Street Journal (March 4, 2016) [Log-in required]