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Jax Daily Record Wednesday, Sep. 21, 202202:22 PM EST

Building permit requests rebound in August 

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This year remains 25% ahead of the pre-COVID numbers of 2019.
by: Dan Macdonald Staff Writer

After four months of decline, the number of building permits for single-family homes increased in August, according to the Northeast Florida Builders Association.

In August, 1,180 permits were issued in Clay, Duval, Nassau and St. Johns counties compared with 940 in July. The year began with 1,457 in January but began to show slight decreases beginning in April, with 1,208 permits.

Over the next two months a slowdown developed with 1,195 permits in May and 1,193 in June.

So far, 9,942 permits have been issued this year compared with 11,183 through August 2021. 

For all of last year, 16,138 permits were granted.

In the third quarter of 2021, builders requested 4,033 permits. 

This month would need 1,913 permits to catch up with last year’s pace. To do so would mean September would have to be the best month since August 2005 when 1,975 permits were issued in a single month.

The August rebound reflects the end of vacations and a continued confidence in the local market, said Jessie Spradley, NEFBA executive officer.

“I reached out to a couple of builders and they are feeling good about our market,” he said.

“One told me that people are back from vacation and he is getting qualified traffic in his models that can buy. Locally, there are buyers out shopping.”

This year remains 25% ahead of the pre-COVID numbers of 2019.

However, supply chain problems, especially with asphalt and transformers, mean permitting will remain restrained until the inventory of basic materials returns to normal, Spradley said.

Three of the four counties showed increases over July. 

Duval had its best month of 2022 with 576 issued permits compared with 301 in July. 

Nassau had 140 last month compared with 99 in July. St. Johns showed a small increase of 355 from 321 in July. Clay County had a dip in August with 210 permits in July compared with 109 last month.

30-year fixed rate doubles over 2021

A week ago the interest rate for a home loan rose to 6.02%, marking the first time a 30-year fixed mortgage had been that high since 2008. 

That new benchmark is double what the interest rate was in 2021 when homebuyers could find a 30-year fixed rate for 2.96%.

The rate 30 years ago in 1992 was 8.39%. 

While that rate is higher than it is now, the game has changed drastically. Then, the inflation rate was 3.01%, compared with 8.263% today.

According to the CPI Inflation Calculator, an item costing $1 in 1992 now costs $2.11.

Nationally, the median cost of a home in 1992 was $121,500, according to gobankingrates.com. The Northeast Florida Association of Realtors says the median area price as of August was $393,900.

Another factor is that the buyer whose mortgage was set at 8.39% would have had ample opportunities to refinance that loan. 

In 2007, 15 years after taking out that 1992 mortgage, the interest rate was 6.34%. And the 2007 inflation rate was 2.85%.

As The New York Times explained, while credit card rates are closely tied to the Federal Reserve rate, home mortgages reflect the yield on 10-year Treasury bonds. That yield is driven by inflation as well as changes in the interest rate established by the Federal Reserve.

Reports are that the Federal Reserve may raise the interest rate one or two times before the end of 2022.

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