Building Permits and Why You Should Care About Them
Before you actualize your industry-changing startup into a new office building, you’ll likely need a building permit. Granted by the local government or other regulatory bodies, building permits enable new and existing construction to proceed. Building permits may seem to be relevant to only housing developers and new businesses, but they also offer insight into the direction of the economy — an important factor to consider when deciding when to sell your Dogecoin holdings.
While a single building permit may not reveal the inner workings of an impending recession, the total number of permits, along with the types of buildings the permits allow, can indicate an emerging trend of business expansion or contraction in developments across the country.
Fortunately for the average person, strolling around and tallying the number of permits their local county has granted is unnecessary. The U.S. Census Bureau releases monthly reports of every new building permit in the country, which are closely watched by investors and economists. The reports are created by surveying thousands of permits across the country and collecting information, such as the type of project, the size of construction and information on the permit-holder. Since data reliant entirely on survey respondents may not be fully accurate, other adjustment and estimation measures are applied to create a more complete picture.
The Housing and Urban Development department factor in building permits when planning federal housing programs as a general increase indicates the country may need more homes. Since building permits indicate the number of residential homes being built, banks use them to establish the current demand for mortgage loans, affecting their interest rates.
But what’s the significance of this if I’m not a banker or a member of some abstract bureaucratic function? If you’re a business owner or entrepreneur, or even someone who wants the vaguest idea of where the U.S. economy may be headed, building permits can signify the overall economic sentiment of the country. As the public feels more confident about the economy’s future, firms seek more building permits to expand their offices. An increase in building permits can also indicate a greater demand for residential homes, showing personal savings may be high as people seek to buy more homes.
As of now, building permits in the U.S. have steadily grown for the last decade, though still short of its peak before the financial crisis. In recent months, building permits have increased (up 2.6% in July on a monthly evaluation), though housing starts have lagged behind. As an investor, business manager or even the average homeowner, the general direction of building permits show a promising future.
