More Housing Crash Evidence: Building Permits Continue to Fall in Exurban Kane County, Illinois

(Hat tip to reader defshepard for alerting me to this article).

For those of you who may not be familiar with the Chicago area, Kane County, Illinois, which lies more than 30 miles from the downtown Chicago Loop, is one of those far flung exurban areas that built up rapidly during the housing boom era when suburbanites fled farther and farther from the city centers in search of a cheap lot on a cul-de-sac in which they could build their dream McMansions. The fact that these artificial communities were even more car-centric and thereby vulnerable to oil price shocks than even traditional, closer in suburbs never entered their minds. Not surprisingly, in most places the subsequent housing crash hit the exurbs the hardest.

It would stand to reason then that if there is ever going to be a recovery in housing it will have take root in the exurbs at some point. As this article about Kane Country from Sun Times Media shows, however, no such recovery is evident:

Building in Kane County is continuing to slide.

In 2011, the county issued 1,335 building permits from January through November, compared to 1,487 for the same period in 2010.

The drop-off is not as extreme as some years have been since the economy started struggling, but the trend continues as the economy continues to suffer, Kane’s Director of Development and Community Services Mark VanKerkhoff said this past week.

“Like everywhere else, we’re probably down from five years ago,” he said.

For November, the county issued 128 permits, compared to 169 in November 2010. The drop is not too significant, but it does continue the trend, he said. The total number of building permits issued annually has been on a sharp decline for about seven years, he said.

Even more telling, however, is this quote:

The number of permits was significantly higher when the county was in boom times for building. The county could typically see between 400 and 500 permit applications to build single-family homes, VanKerkhoff said. As construction came to a halt, those numbers began to dip significantly.

About three or four years ago, the number of building permit applications for single-family homes barely topped 100. Now, they are routinely fewer than 75, he said. This year, they came in with 41 single-family home building permit applications.

Part of the reason for the decline is that the focus of the market has changed. More people are interested in rental units, since they cannot always afford to purchase housing, VanKerkhoff said.

"Can't always" afford to purchase single family housing? Looks to me like it is rapidly approaching the point where NOBODY can afford to purchase single family housing.

There is a very simple reason why single family home construction has virtually halted in places like Kane County. Few high paying jobs are being created, which means there is little expansion in the number of people who can afford to build a new McMansion anymore. But few people understand that basic fact, as evidenced by the concluding paragraphs of the article:

VanKerkhoff mentioned that the building department has spent more time looking at property maintenance ordinances. A county task force was recently formed to look at ordinances on the books, including how the county addresses abandoned construction projects, and the application process. The task force also is looking at ordinances determining how many vehicles can be left on a property.

The task force began to make sure that ordinances designed to protect the county during boom times were not deterring builders from doing business in Kane now that the economy is suffering, task force chairman Mike Donahue said.

I hate to tell you this, Mr. Donahue, but you could remove all of the building ordinances and allow the builders to cut whatever corners they want and it still wouldn't make any difference because they have no customers. If people can't afford to build new houses at a time when a 30-year, fixed rate mortgage is going for 4% interest, weakening a few building ordinances isn't going to change that basic fact.


Bonus: Looks like the exurbs may die before Chicago does