Keep Our Fingers Crossed

It is being reported that there has been an upturn in the number of building related permits being issued by county and local agencies in Delaware in  the past year.

Local governments in the past year, March of 2012 to March of 2013, have issue 4,131 permits for single family homes, this is a 26% increase, and should mean new jobs in the construction trade. Just in the first three months of 2013,  1,037 permits have been issued state-wide, this is up from the first quarter of 2012 with only 891 issued.

The increase in building would also mean an increase in the transfer tax that is collected on every home sale. This would mean that state and local governments could stop stressing over creating new revenue streams from punitive ordinances, of which we have seen an increase in since the economic downturn of 2008.

The uptick in permit request seems to be concentrated in Sussex and New Castle counties and should equate to more jobs. Sussex does seem to be the leader in permit issuance with 693 permits for new single family homes so far this year already.  All of this most likely can be tied to rising home prices, which have encouraged both developers to jump back in the pool, and home owners to again consider selling their homes and buying new ones. With interest rates creeping up, but still well below historic highs, this is another reason why many will see this a s a good time to take the leap of faith and start buying again before both prices and rates regain too much momentum.

Right now it is still a buyers market, the question and the gamble is, how long before it becomes a seller’s market again? It would seem that the people in the housing market, the people who make their living from building and selling homes, have begun to feel like it is time to buy and build again in anticipation of this. Let us hope that we do not see the same mistakes that led to the last housing bubble-pop!

I think we can all agree that the last bubble-pop was a result of three major factors, one being the government’s mandate of risky loans the led many to buy homes that they could not afford to pay for. Second, there was a glut of new homes placed on the market as developers attempted to take advantage of the buyers these mandates created, buyers that would not have existed had lenders not been forced to make the loans. And third, the phenomenon of house flipping, where homes were bought simply in order to sell them for a short sell profit as quickly as possible, and in so doing causing prices to artificially rise. With these three factors occurring at the same time, the bubble could not be sustained, and it popped.

Let us keep our fingers crossed that all involved have learned a lesson from the past. That being, let the market determine the need for new homes, let lenders decide where to risk their money, and hopefully the house flippers were so devastated last time, they have no resources  to get back into the game.

Now of course there will be political attempt to take credit for this turn around, but personally I think it is simply the natural ebb and flow of a free market economy. The people with the money to invest have been hunkered down waiting for a time when the consumer again feels comfortable taking on new debt. The developers have been waiting until lenders are again ready to start loaning money, and lenders have been waiting to see how deep the recession would go.

It would seem that at least here in Delaware, that many are willing to take the risk. Only time will tell if they are right or not.

8 Comments on "Keep Our Fingers Crossed"

  1. waterpirate says:

    I wish I could be optimistic about people learning lesons from the past, but I am not. Last week alone I was in contact with 3 seperate ” new real estate moguls ” who had laid out all the cash they had for a purchase they could barely afford, without any inspections being done. All three properties would have failed any influent and effluent testing had it been done.
    The house flipper version 2.0 did not learn anything from version 1.0

  2. Frank Knotts says:

    WP, that is why it is so important that lenders be allowed to decide who they will lend money to and when, and not be mandated by government. And if they and the barrower take bad risk then they must pay the consequences, and not be bailed out by government.

  3. waterpirate says:

    Preaching to the choir Frank. My biggest gripe was that all the people who got bailed out, and got a special deal from big brother left all the responsible people who did not get themselves into trouble to continue to pay our bills and the bail out bills as well.

  4. Mike Protack says:

    As long as the largest employer in Delaware is government, the Delaware economy will never thrive.

  5. Laffter says:

    Ummmmm,m- just who do you suggest those 37k (plus or minus) folks work for Mike

    You have lots of criticisms

    So, enlighten us, where should Delwareans work? You did write a plan and have been hawing it for years so the answer should,be easy

    Where do we employ all those people…….a?

  6. waterpirate says:

    I do not have any problem wit SOD being the largest employer in the state. I have a problem with jobs not based on effeceincy, and tax payer monies being wasted due to public sector non accountability for work product, efffeciency, and the paralysis of no decision makeing and overall lack of common sense.
    Albeit I have interaction with one division on a daily basis that most do not, but we are all aware of the excesses and wastes that go on in other depts.

  7. Frank Knotts says:

    Laffter, to tag onto what WP said, part of the trouble is that the state has taken over many functions that were once in the realm of the private sector, and as is often the case, not in a more efficient manner. The amount of paperwork and redundancy to accomplish the simplest chore is costing the tax payers much more than if there was private competition for some of these functions. Competition would lower the cost tot ax payers while still employing people. Of course this would also lower the number of public sector union jobs and that built in voting block for Democrats.

  8. waterpirate says:

    I believe the SOD union has lost its power to compel the SOD to do anything. So because the union lost it’s juice, pay raise freezes and hiring freezes and position elimination and Friday furlow days, it makes for some pissed off people who because the SOD treats them so poorly, they produce even less.

    If the SOD had the power to let someone go for non performance instead of transferring them to somewhere they can do even more damage, we would see a improvement in moral, ie productivity. Rewarding people for efficency and productivity rather than time served.

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