February 06, 2003 — The Bureau of Economic and Business Research, David Eccles School of Business, University of Utah today released preliminary year-end data for permit-authorized construction. The data for Utah can be summed up as “better than expected”.
The number of new single-family homes receiving permits during 2002 was the best showing in three years. Permits were issued statewide for 14,461 new single-family homes, 4.4 percent more than in 2001. The number of multi-family units was down 18.6 percent, to 4,145 units, for two reasons: many projects were pushed ahead in 2001 in order to be completed for the 2002 Winter Olympics and apartment vacancy rates are now at the highest level since the late 1980s.
The real story in multifamily construction is that nearly half-1,939 of the 4,145 units-were condominiums rather than rental apartments. Diane Gillam, research assistant with the bureau says fewer and fewer households are renting. “The driving force behind both the condominium boom and the higher level of single-family home construction is the 40-year low in mortgage interest rates. This helps make condominium and homeownership more attractive than renting, and contributes to the lower levels of apartment construction,” said Gillam.
The City of St. George led all other Utah cities by far in the number of new dwelling units receiving permits in 2002, with 1,140. Of those, 883 were single-family homes. Unincorporated Salt Lake County was next with 879 units, including 350 apartment and condominium units. Other cities with a high number of new dwelling units include West Valley City 672, West Jordan 660, Provo 609 and South Jordan 605.
Residential valuation soared to an all-time high of $2.5 billion in 2002, due to the strength of the single-family and condominium sectors. Low mortgage rates also allow homeowners to get “more house for the dollar” adding features and amenities to new homes that might not otherwise be financially feasible.
The value of new nonresidential construction declined in 2002, but by a smaller percentage than had been expected. Nonresidential valuation declined by 7.5 percent to $897 million. This represents the lowest level of nonresidential construction since 1995. Nonresidential construction value was buoyed somewhat by two major projects in 2002: the new IHC hospital in St. George, with a permit value of $58.0 million and the new $71.7 million athletic complex at BYU.
The construction sector hardest hit by the slowing economy was additions, alterations and repairs, declining 30.2 percent from 2001 to $392.9 million. Total permit construction valuation was down 2.7 percent from the previous year to $3.78 billion, the lowest level since 1997.