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06/30/2022

The Building Permit Process

Local Impact

Let’s take a moment to understand what a building permit is and its role in the construction process. 

What is a building permit?

A building permit, which is mandated by every state, county, city, and town, is an official government document that’s needed, “…to begin legally sanctioned construction or renovation on a property,” according to HomeAdvisor

Permitting requirements, building codes, and fees vary from location to location. After permits are issued, a government agency related to the building industry, “… will have the construction inspected to make sure it passes building and energy codes.”

As of January 2022, the cost of a building permit in the United States runs between $424 and $2,291, while the national average is $1,330, according to Angie’s List. The price of a permit varies based on location, property size, project scope, and project cost. In fact, regulations imposed by all levels of government account for $93,870, or 23.8% of the current average sales price ($397,300) of a new single-family home, according to a new study by NAHB.

Because of the cost, it may be tempting to skip the permitting stage. Projects that do not have the proper permits could be forced to shut down, and the owner/builder will face significant fines. HBA Dayton members adhere to the highest ethics and values set forth by the industry and an HBA member will not proceed with a job unless a permit is in place. To find a builder/remodeler member you can trust please use our Consumer Resource page at HBADayton.com.

The waiting game.

A building project is not moving forward until the permit is secured. In the United States, building permits are typically approved in two weeks at which time a permit is issued. 

Building permit approval may be delayed for a few reasons. Key details may be missing from the plans, required seals from the architect or other professionals may be missing, a change in the work while the plans are being reviewed, improperly filling out the application, etc. 

Issues with the application may lead the government agency to go back to the contractor and ask for more information. This will pause the process as the government agency will not move forward until they have all the required information.

Once a building permit is issued, it takes an average of 1.1 months for construction to commence. This is for single-unit structures as of 2019, according to data from the U.S. and the four Census regions.

Behind the data.

Building permits are valid for a set amount of time. Once a building permit has been granted, you do not have an unlimited amount of time to start and complete the work, however, permit reporting does not guarantee starts and is a lagging indicator. However, locally, we can use this data to help interpret the housing climate in the Dayton region.

The chart below shows the permit data the HBA aggregates month over month (MoM) and year over year (YoY) to gauge the housing industry in the region.

Permit 06-21

From here, we are able to forecast the overall economic impact of housing on the Dayton region. Using data from the National Association of Home Builers, for every 100 single-family homes, the total one-year impact:

  • Local Income: $28,670,800
  • Local Business Owners' Income: $8,606,200
  • Local Salary and Wages: $20,064,700
  • Total Taxes: $3,358,600
  • Local Jobs Supported: 394

When we extrapolate that data to show the overall impact the housing industry has on the Dayton region we can use the permit data compiled to derive the following economic impact from 2021 data:

  • Local Income: $861,844,248
  • Local Business Owners' Income: $258,702,372
  • Local Salary and Wages: $603,144,882
  • Total Taxes: $100,959,516
  • Local Jobs Supported: 11,844

Final thoughts

As housing continues to be at the forefront of the news cycle, it is important to remember that housing not only provides the shelter for the jobs being brought to the Dayton region, but also is a major economic driver to the overall region's economy.

If you are interested in seeing the full presentation or having our team present to your group or City Council, please contact our C.E.O., Eric Farrell.

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