August Housing Starts Decline, But 2005 Totals Should Be Near 2004 Levels, CBIA Announces
September 28, 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 - Despite a modest decline in housing starts during August, due in part to a fee increase in Riverside County, housing construction is expected to remain bullish for the remainder of 2005 and into 2006, the California Building Industry Association announced today.
CBIA Chief Executive Officer Robert Rivinius said that was good news for the economy but the numbers still portend bad news for prospective homebuyers because it means the supply of new homes and apartments will continue to fall short of the demand.
A total of 16,522 building permits were issued in August statewide, down 11.1 percent compared to July and down 10.6 percent from August 2004, according to figures compiled by the Burbank-based Construction Industry Research Board. But CBIA Chief Economist Alan Nevin said that the drop-off in housing starts is not a trend.
"It is statistically misleading to look at construction permit numbers on a month-to-month basis. There can be as much as a 10-15 percent swing in any month, particularly in multi-family statistics. It's much more accurate to look at quarterly or semi-annual numbers in order to assess real trends," Nevin said.
Nevin pointed out that based on figures for the first eight months of this year, housing starts this year should come close to last year's 212,900, the most in 15 years.
Single-family housing starts in August totaled 12,850, down 8.5 percent from July and down 4.6 percent compared to August 2004. CIRB said the biggest factor in the drop-off in single-family construction was a fee increase in Riverside County - the state's leading growth area - that took effect August 1. Many builders obtained their permits in July to avoid paying the higher fees, which are typically passed along to new-home buyers.
Multifamily starts totaled 3,672, down 19.1 percent from July and down 26.8 percent from August 2004. Multifamily construction tends to be much more volatile than single-family starts.
(A table listing housing production by metro area has been posted on the CBIA Web site)
Noting the state's housing affordability rate continues to plummet, Rivinius said production still is not keeping up with the need for new homes and apartments.
"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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The California Building Industry Association is a statewide trade association representing more than 6,400 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.
