CHATHAM – Construction activity continued at a brisk pace last year. While the number of building permits increased by only 3 percent, the total construction value of the permits jumped 15 percent.
While most building numbers were up over last year, building activity hasn't yet caught up with 2015, which saw the town's highest-recorded permit values as well as a number of new homes. That year 49 new houses were permitted and total building permit value was $92 million. Officials attributed the decline after 2015 to a number of factors, including the moratorium on new natural gas connections and changes to flood maps.
The total value of permits for 2017 was $70,990,963, a 15 percent increase over 2016's total value of $61,699,700. Last year 36 new homes were permitted, compared to 37 in 2016. The average value of those new homes was also up this year at $806,891, 24 percent higher than last year's average of $647,797 and 4.5 percent above the $771,574 average value seen in 2015. Last year's figure is still 13 percent below the $930,068 per dwelling seen in 2014.
There were also more demolition permits issued last year, 30 compared to 24 in 2016. While that's still behind 2015's 39 demolition permits, it could be an indicator that vacant land is beginning to run out.
“Certainly as time goes on there will be less and less buildable parcels,” said Community Development Director Kathleen Donovan. That's something she'll be keeping an eye on, and staff has also been discussing updating an inventory of vacant buildable land done several years ago.
More homeowners are also clearly putting more resources into existing houses. The number of permits for additions and renovations increased by 3 percent, from 755 in 2016 to 780 last year, but the average permit value increased 12 percent, from $69,954 to $78,908.
The huge increase in the average value of a home in Chatham since 2000 – 242 percent, from $249,975 to $853,885 last year – increases the economic viability of upgrading existing homes, Town Manager Jill Goldsmith noted in her recent budget report to selectmen. That applies throughout town, not just in the traditionally higher-value coastal areas, and especially escalates the value of the few remaining vacant parcels.
“While some of this increase in housing values can be attributed to inflation and increases in the cost of construction materials,” Goldsmith wrote, “this increase is indicative of a strong market demand for housing in Chatham and the type of homes being constructed.”
The median sale price of a home in Chatham in 2017 was $637,500, down 6.3 percent from $680,000 in 2016, according to the Cape Cod and Islands Association of Realtors.
Also contributing to the final totals were 52 non-residential additions and renovations. While that was the same number as last year, the total value was $2,312,525 as opposed to $1,864,462 in 2016. There were also eight public structures, including the new $2 million water treatment plant off Morton Road, for a total value of $4,204,657. There were only two commercial structures permitted last year, valued at $296,800.
Once all of the permitted work is completed, it will increase the assessed values of properties and mean more “new growth” on the town's tax rolls, increasing the amount of property tax revenue to town coffers. That, in turn, minimizes increases in the tax rate.
Looking to the year ahead, Donovan said this year's high number of demolition permits and the recent approval of a 13-lot subdivision off Barn Hill Road and a five-lot development on Williams Way could lead to more new houses being built.
“It's certainly something I'm keeping an eye on,” she said.