Episode 159: Building Permits — A Leading Indicator of Future Supply

Building Passive Income

Episode 159: Building Permits — A Leading Indicator of Future Supply

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Building Permits and Real Estate Supply

The building permits real estate relationship can give investors an early look at potential future supply. However, a permit does not guarantee that a property will be built.

In this episode of Building Passive Income, CREI Collin explains how to track building permits and evaluate the development pipeline. You’ll learn how permits, construction starts, projects under construction, completions, and absorption work together to provide a clearer picture of supply.

What You’ll Learn

• What building permits are and why they matter
• How building permits can signal potential future supply
• The difference between permits, starts, and completions
• How to evaluate projects already under construction
• Why absorption and demand matter when analyzing supply
• Where to find building permit data
• How to use pipeline data when underwriting real estate

Key Takeaways

The building permits real estate relationship is most useful when permits are viewed as one stage of the development pipeline.

Think of the pipeline as: permits → starts → under construction → completions → absorption.

Permits show what has been authorized. They do not guarantee what will ultimately be built. Investors should compare expected deliveries with absorption, vacancy, rents, employment, household formation, and other demand fundamentals.

Use pipeline data to evaluate future competition and stress-test your underwriting rather than treating permit activity as a standalone buy or sell signal.

Resources Mentioned

• U.S. Census Bureau — Building Permits Survey
• Federal Reserve Economic Data (FRED) — Residential Building Permits
• Local building and planning departments
• Commercial real estate data providers

Connect with CREI Partners

Want to learn more about how CREI Partners evaluates supply, demand, and market fundamentals when underwriting investments?

Schedule a call with the CREI Partners team.

Disclaimer

This podcast is for educational purposes only and should not be considered financial, legal, tax, or investment advice. Building permit and construction data should be evaluated alongside local supply, demand, financing conditions, property fundamentals, and individual investment objectives.