Housing Starts Drop From June's Strong Pace, But Increase Compared to July 2004, CBIA Announces
Without Reforms, Production Will Still Fall Short of State's Need
August 30, 2005
Contact: John Frith
CBIA Public Affairs Director
(916) 443-7933 ext. 332
(916) 803-3005 (cell)
jfrith@cbia.org
or
Deana Vladic
CBIA Communications Specialist
(916) 443-7933 ext 346
dvladic@cbia.org
SACRAMENTO - Housing starts remained strong in July, increasing the chances that California will have another strong production year, the California Building Industry reported today. But CBIA officials added that even today's construction level is not enough to quench Californians' thirst for new homes and apartments.
While total residential building, measured by building permits issued in July, was down 16.4 percent from June, going from 21,385 units to a total of 17,875 units in July, housing starts were up by a robust 8.2 percent compared to July 2004. Alan Nevin, CBIA's Chief Economist, said it appears production will be on par with last year's levels, but warned that current policies makes it difficult to build affordable housing.
"There remains a major part of the market that cannot be satisfied with ownership housing," Nevin said. "Restrictions on multifamily zoning, unduly high development fees and other governmental interferences in the construction process add to the cost, making it difficult to build affordable homes."
According to figures compiled by the Construction Industry Research Board, single-family home production dipped 17.1 percent from June to 13,658 starts in July, but that figure was 8.9 percent ahead of July 2004. Multifamily housing starts were at 4,217 units, down 14.2 percent from June but up 5.8 percent compared to last July.
(A table listing housing production by metro area has been posted on the CBIA Web site.)
The robust production so far this year increases the likelihood that total housing starts for 2005 will be near last year's 212,960, the highest level in 15 years. But CBIA Chief Executive Officer Robert Rivinius, noting the affordability rate for homes in California continues to plummet, said production still is not keeping up with the need.
"While construction remains on par with last year's levels, the fact remains that even more new homes and apartments need to be built to keep up with continued strong demand," Rivinius said.
"The state's population continues to grow by 500,000 to 600,000 people each year, so we need to be building nearly 250,000 homes a year just to keep up with demand. Until construction is able to keep up with demand, housing costs are likely to continue climbing," Rivinius said.
He said the Legislature must take steps to fix the problem or the housing crisis will worsen, and stressed that overregulation, excessive fees and the lack of available land for building all combine to hinder housing production. To increase the availability - and affordability - of housing, CBIA is sponsoring legislation that would increase homeownership opportunities by:
* removing regulatory barriers to housing production
* making sure that there's an adequate supply of land to build well-planned housing in all communities;
* streamlining the approval process to increase the supply of more-affordable higher-density homes and condominiums in the state's job centers
* and requiring local governments to provide more justification- and be more accountable - for the fees, ultimately paid by new-home buyers, that drive up the cost of each new home by tens of thousands of dollars.
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(Note to editors: Building permits are considered to be an accurate way to track housing starts in California because builders generally don't pull their permits until they're ready to start construction due to the permits' high cost.)
The California Building Industry Association is a statewide trade association representing more than 6,300 businesses - homebuilders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals. A recent study determined that homebuilding generates approximately $60 billion a year to the California economy and creates an estimated 526,000 jobs statewide.
The Construction Industry Research Board (CIRB) is a nonprofit research center established in 1974 to provide statistical information on the California building and construction industry. More information is available on the CIRB Web site, www.cirbdata.com.
