New-Home Production Down Again in March, CBIA Announces
April 25, 2008
SACRAMENTO — The pace of new-home building in California continued to slow in March as builders struggled to sell off existing inventory while dealing with tightening credit standards, the California Building Industry Association reported today.
According to housing permit data supplied by the Construction Industry Research Board, total housing starts in California, as measured by building permits issued, dropped 65 percent in March when compared to the same month a year ago to 4,713 units. Production of single-family homes fell 63 percent while construction of multifamily units decreased 68 percent when compared to March of 2007.
In March, permits were pulled for just 2,964 single-family homes statewide, down 63 percent from March 2007 but up 17 percent from the previous month. Multifamily housing starts — condos and apartments — totaled 1,749, down 68 percent from March 2007 and down 60 percent from the previous month.
During the first three months of the year, single-family home production was down from the same period last year by 61 percent with 8,189 units permitted, while multifamily home production slid 32 percent with 8,098 permits pulled. Total new home production was down 51 percent.
CBIA Chief Economist Alan Nevin noted the number of single-family permits issued in the first quarter of 2008 was the lowest total in recorded memory with declines throughout the state but with far higher decline rates in the San Joaquin Valley.
He also noted that with the decline in both single-family and multifamily permits, their will be a limited supply of new for-sale homes when the market turns around.
“Multi-family permits consist largely of rental apartment units rather than ‘for sale’ housing,” said Nevin. “The massive upsurge in the sale of foreclosures in inland California has largely displaced new home and traditional resales, and it’s anticipated that the large wave of foreclosures will not subside until later this year.
“As a result, homebuilders will continue to start new homes on a very limited basis, often requiring presales prior to breaking ground,” he said. “Ultimately, this severe reduction in ‘for sale’ home production will result in a tightening of demand for both new and resale housing as the economy moves back toward normalcy.”
CBIA President and CEO Robert Rivinius added that in order to keep some semblance of normal supply and demand, the California Legislature needs to pass CBIA-sponsored legislation that will allow homebuilders to quickly get projects off the ground when the market begins to rebound.
“Perhaps the most important bill would extend current subdivision maps for two years, allowing homebuilders to avoid a costly and redundant approval process that will delay projects even further,” Rivinius said. “This will allow builders to quickly respond to a market turn-around and help keep prices as low as possible for when more people start qualifying for loans and start looking to buy new homes again instead of foreclosures.”
The Association is also backing state legislation that would allow impact fees to be paid when the house is completed instead of when the building permit is obtained, and federal proposals to create a tax credit for buyers of newly constructed homes and to make permanent increases in federal loan limits to help ease the credit crunch in California.
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The California Building Industry Association is a statewide trade association representing nearly 6,700 businesses - homebuilders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals. A recent study determined that when homebuilding is at healthy levels, the industry generates approximately $60 billion a year to the California economy and creates an estimated 526,000 jobs statewide. More information is available on the Association's Web site, www.cbia.org.
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.