The State of Construction 

Just last week the U.S. Census Bureau reported that building permits, which refer to permits that have been filed and subsequently approved, stood at an annual rate of just over one million in July, which was an 8.1 percent increase from June and a 7.7 increase from the same period in 2013. Though such increases indicate a future increase in activity, we still have some ways to go before returning to historical norms, according to NAHB Senior Economist Michael Neal.

“During the housing boom, there was a lot of evidence of over-building, and the construction industry fell precipitously as a result,” he says. “Since then, construction starts have increased, but they remain below normal levels. On the other hand, so does demand.”

Speaking specifically to Chicagoland’s market, Debbie Beaver, the vice president of operations for William Ryan Homes, says that because the spring was such a great selling market for new homes, the avenues to obtaining a permit have become clogged, and municipalities are having difficulty issuing them in a timely manner. 

“In the suburbs, the standing inventory is only at a 1.5-month supply, which is very low for new construction,” Beaver says.

Like most of the country, especially those in judicial states, like Illinois, which require foreclosures to proceed through a much more rigorous legal process, Chicago construction took a major dive from 2008 to 2009, and has since been struggling to regain its footing. 

According to NAHB data, residential permits in Chicago proper, in terms of total housing units, dropped by nearly 10,000 year-over-year following the 2008 crisis. Since then, permit approvals have been steadily rising, but it wasn’t until 2012 that new construction really started to experience acute increases. From 2011 to 2012, permits rose by 1,764, and by the end of 2013 that number had increased by more than 2,000, pushing overall permits to 11,627 – the first time permit approvals had reached five figures since 2008.

Elliot Eisenberg, former senior economist for NAHB and current president and chief economist for GraphsAndLaughs.net, says that while Chicago is suffering from the pangs of stifled growth, the city’s universities and popular sports teams, which garner considerable attention from tourists and potential residents, are enough to ensure an eventual return to stability. The real question, he says, will be the relationship between suburban and downtown construction.

Just as the housing and real estate industry is an indication for how the economy is fairing, a keen eye has been kept on the state of employment. Economic Modeling Specialists International (EMSI), a Career Builder company, reports four out of six northern Illinois counties lost 2 percent or more of its jobs from 2008 to 2013. Cook County lost nearly 88,000 jobs, or 3 percent, and Lake County fell 3 percent as well, losing just over 10,700. DuPage County faired slightly better with 2 percent of its jobs lost. McHenry County had the largest percentage lost with 9 percent, or 9,195 of its more than 104,000 jobs lost. Will and Kendall County both saw improvements of 4 and 5 percent increases from 2008 to 2013.

Prior to the kickoff of what would become the recession, from 2002 to 2007, all of the counties except for Cook (1 percent drop) saw an improvement in employment. Kendall County saw the largest percentage increase with 41 percent growth, or 6,900 jobs added. Will County improved by 27 percent with more than 42,500 jobs added. McHenry added an additional 12,000 jobs. Lake and DuPage counties had modest gains with 3 and 6 percent increases.

According to Joshua Wright, the director of marketing and PR at EMSI, because of the way the company’s data is compiled, they are unable to delineate whether individuals starting new positions were unemployed or changed positions.

“Every county except Cook saw employment gains from 2002 to 2007, especially Kendall, McHenry and Will,” Wright says. “And every county except for Will and Kendall hasn’t recovered from the bottom of the recession.”

Based off the growth (or lack thereof) that each county has experienced since 2002, EMSI projects Cook County to improve by 1 percent, or approximately 22,000 jobs added, through 2018. DuPage, Lake and McHenry may see a 3 percent gain or nearly 53,000 jobs added amongst the three counties. Will County may see a 9 percent jump.