May 17, 2010. Retrieved online May 27, 2010 from rook Stockberger, Las Cruces Sun-News
LAS CRUCES — Have you seen the residential construction on the East Mesa and other parts of Las Cruces? Work appears to be under way for more new homes at a pace not seen in a couple of years.
According to the City of Las Cruces, through the first quarter of 2010, 80 permits were issued for new residential construction. That is the most since 2007 when 132 such permits were issued for a similar time period. The past two years, fewer than 50 permits for new residents had been issued during the first three months of the year.
Is this a forecast of sunnier days for area builders?
Not necessarily, said Jim Peach, who teaches economics at New Mexico State University.
“If you’ve seen a surge in building permits, it’s probably because of the tax credits,” Peach said.
To be eligible for the tax credits, buyers must have had a contract before the end of April and must be able to close on a house before the end of June.
“I know somebody who did that and hurried up and pressured the builder to get a contract by April 30,” Peach said.
So we might just have passed through a residential construction bubble — one much smaller than we experienced several years ago — that will deflate now that the tax credits have rode off into the sunset.
John Hadley, president of the Building Industry Association of Southern New Mexico, said most builders are just hoping for a steady improvement.
“You talk to the old timers here and they say it’s about 3 percent a year,” Hadley said. “That’s the same as it’s always been.”
The city permit information also points to an increase in overall permits, although the value of those permits is down.
Through the end of March, 774 building permits have been issued by the city for a total valuation of $42.3 million. Last year through March, 636 permits were issued for a valuation of $59.5 million. The big difference is because January of 2009 saw some big permits pulled for commercial projects and one alone for $8 million for an apartment complex.
February and March actually saw an increase in both number of permits and valuation compared with the same months last year.
Hadley cautioned that total permits does not necessarily reflect an increase in new housing. During a down economy, more people can be expected to spend money on renovations instead of a new house.
“You start looking down through the permits and you see there are a lot of re-roofs in there,” he said.
Read the Las Cruces Sun-News article.