MARK LEFF
‘Short-term increase’

A greater number of housing permits were issued in the Bay State during the first three quarters of the year, an increase that local homebuilders attribute to the state’s anti-snob zoning law and the popularity of age-restricted housing that has been popping up in communities throughout the commonwealth.

A total of 15,204 housing permits were issued through the first nine months of the year, a 10 percent increase from the 13,754 permits issued during the same period in 2003. The number of single-family home permits issued also rose 15.6 percent during the same period, after dipping nearly 9 percent last year. Nearly 70 percent of all housing permits issued in the state, or 10,591, were for single-family housing.

The increase is an encouraging sign for homebuilders who have long argued that restrictions on development have limited the supply of housing and driven up home prices in Massachusetts.

However, homebuilders point out that many of the permits that have been issued this year are for housing projects that have been in the works for at least two years or more. And some homebuilders interviewed last week said they weren’t sure the upward trend will continue, particularly since they’ve already started to see signs of a market slowdown.

“I think it’s a short-term increase in permits. Whether it will continue to go up is a very big question,” said Mark Leff, senior vice president of Salem Five Bank and vice president of the Home Builders Association of Massachusetts.

Some homebuilders attribute the increase in the number of multifamily housing permits issued over the last few years to Chapter 40B, the state’s so-called anti-snob zoning law. The law is designed to enable developers to build denser housing development in communities where less than 10 percent of the housing stock is affordable.

Developers have used the law to build projects with a mix of market-rate housing and units that are affordable to lower-income households. Both apartment complexes and homeownership units have been produced under the law.

Even though the number of permits issued for multifamily housing – defined as housing with five or more units – slipped slightly during the first three quarters to 3,472 from 3,522 a year ago, the number was significantly higher than the 2,289 permits issued during the same months in 2002.

The state had a short supply in all segments of the housing market just two or three years ago, according to Leff, but more recently, new apartments and condos for entry-level buyers have been coming on the market, as well as high-end housing geared for empty nesters — those aged 55 and older whose children are grown. That type of age-restricted housing has been embraced by many local officials who fear that other types of housing geared toward families will overburden their school systems with more children.

Leff said he worries the rate of permitting, particularly for housing under Chapter 40B, might slow given a series of regulations adopted by the state two years ago that, in his opinion, “constricts” the supply of 40B permits.

Homebuilders say that despite the increase in permits there is still a short supply of housing for working families, with much of the new housing that is being constructed falling into the high-end, luxury category.

“We’re finally making some inroads in building some more housing which will ultimately lower the cost of housing,” said Len Gengel, of C&S Builders in Rutland. “But we’re still lacking when it comes to workforce housing.”

‘Change in the Wind’

The median price for a newly built single-family home in 2003 or 2004 exceeded $500,000 in every Massachusetts county except Worcester and Suffolk, according to information from the MLS Property Information Network gathered by the state homebuilders association.

The median price for a new home in Middlesex County was nearly $700,000. But by far, new-home construction appears to be most expensive in Norfolk County, which includes such affluent towns as Brookline, Dover and Wellesley.

In that county, the median price of a newly constructed home was almost $1 million, or $925,000. Compared with new homes in Norfolk County, Worcester County is a bargain. The median price for a new home in Worcester County was $399,900.

State officials, business leaders and housing advocates have increasingly pushed for more housing production during the last two years as a way to temper skyrocketing home prices, which they say is a barrier to the state’s economic development.

Numerous and oft-quoted studies have highlighted the housing shortage in the state and have pinned the blame on development restrictions that have been adopted by towns and cities throughout Massachusetts. When Gov. Mitt Romney was elected two years ago, he vowed to double the number of building permits issued.

Of the 41,417 permits issued in New England during the first nine months of the year, 36 percent were issued in Massachusetts. With 8,487 permits issued, Connecticut is the second most active state in New England when it comes to homebuilding.

The Bay State’s 15,204 permits for the first nine months of the year pale in comparison to Southern states like Georgia, where 79,883 permits were issued during the same months, and even Virginia, which awarded 48,555 permits.

In fact, the number of permits issued in Massachusetts represents a small share — about 1 percent – of all permits nationwide. In 1985, the state’s permits accounted for 2.26 percent of all the permits issued in the country, according to statistics from the U.S. Census Bureau.

Greg Spier, a Foxboro builder who this year is serving as president of the state’s homebuilders association, said homebuilders are concerned that permit numbers may go down next year given recent market activity.

“We’re building upper-end homes, and we’re seeing a slowdown [in that market],” he said.

Gengel, the builder in Rutland, said he sold three homes in September. But he, too, started noticing that interest from prospective buyers of new homes had eased in October. Open houses used to draw at least 10 couples, but now that number has fallen to three or four couples, he said.

Part of the shift is the typical seasonal slowdown that the residential real estate market experiences in early November and throughout the holiday season, according to Gengel and Spier.

But Spier says he’s talked to real estate brokers who’ve noticed that a slowdown began even earlier this year. “It seems like there’s a change in the wind,” he said.

Aglaia Pikounis may be reached at apikounis@thewarrengroup.com.