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During the past 10 years, Metropolitan Area residential building permits declined from a peak of <br /> 20,973 units in 2003 to 4,028 in 2009, as shown in Table 4-16. The housing boom undoubtedly <br /> fueled the high number of building permits in the 1999 to 2004 period. Building permits fell <br /> below average in 2005 and began a sharp decline in 2007. While it was not apparent at that time, <br /> this decline coincided with a significant decline in household formation. <br /> Between 2006 and 2009, building permits fell from 12,109 to 4,028 in 2009, a two-thirds drop <br /> similar to the drop in household formation nationally. In past recessions, declines in household <br /> formation have been less severe and have been reflected in slight drops in building permits and <br /> decreased apartment occupancy rates. During the Great Recession, those declines have been <br /> greater and lasted longer due to the slow recovery. <br /> In the Metropolitan Area, as the economy has improved and the unemployment rate has declined, <br /> there's been an increase in the number of building permits issued, particularly for multi-family <br /> housing. This indicates that the rate of household formation is beginning to increase creating <br /> demand for new housing. It's uncertain how long it will take household formation to recover to <br /> previous levels, but the process seems to be underway. At some point, there may be an increase <br /> in household formation that makes up for some of the household formation that did not occur in <br /> 2008, 2009, 2010, and 2011. How much pent up demand exists is subject to speculation. <br /> Stabilized Residential Demand <br /> The estimates of future housing demand in incorporate State Demographer estimates of future <br /> household growth for 10-year periods. These estimates represent stabilized residential demand <br /> based on long-term household growth estimates and do not reflect cyclical changes in household <br /> formations. <br /> The relationship of stabilized residential demand to past annual building permits and household <br /> formations for the Metropolitan Area are shown on Figure 4-4. The blue bars represent annual <br /> unit building permits and the horizontal black lines represent average annual household growth <br /> for 1990 to 2000 and 2000 to 2010. The red bars represent stabilized future residential demand. <br /> Stabilized annual demand is decreasing because the State Demographer is projecting slower <br /> future growth for the Metropolitan Area. <br /> Household growth in the Metropolitan Area has been declining since the 1970 to 1980 period <br /> when annual average household increase was 18,231. In the next decade (1980 to 1990), the <br /> average annual increase was 15,406. Between 1990 and 2000, the average annual household <br /> increase was 14,595 (shown by the black line in Figure 4-4) compared to annual average <br /> building permits of 15,141, a difference of 3.6 percent, which could be accounted for by vacancy <br /> and demolition of existing units. In the latest 10-year period (2000 to 2010), average annual <br /> household growth was 9,830 compared to average annual building permits of 12,279. The sharp <br /> decline in building permits beginning in 2007 is clearly evident. Building permits more than <br /> doubled in 2012 to 10,301, a positive sign. Future stabilized residential demand is represented <br /> by the red bars and is expected to grow slowly over the next five years. This graph demonstrates <br /> that over the long-term, residential demand is expected to moderate as household growth slows. <br /> 4-20 <br />