Housing Starts Show Decline in October
But Production for 2005 Should Still Top 2004's 15-Year High
November 29, 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
(Note to editors: A table listing housing production by metro area has been posted in the Newsroom section of the CBIA Web site.)
SACRAMENTO - Despite a decline in housing starts during October, partly attributed to the indirect effect of new energy standards that went into effect on October 1, housing construction for the year is expected to exceed production recorded in 2004, the California Building Industry Association announced today.
CBIA Chairman Layne Marceau, a Bay Area homebuilder, said that while homebuilders are all but certain to produce about 213,000 new homes, condominiums and apartments in 2005, the supply continues to fall short of the demand, and the pinch will continue to be felt by prospective homebuyers.
"California's population continues to grow by 500,000 to 600,000 people each year, and in order to keep up with the constant demand, nearly 250,000 new homes need to be built each year," Marceau said. "Until regulatory barriers at the state and local level are removed to allow production to finally keep up with demand, the state's housing affordability crisis will continue."
A total of 14,425 building permits were issued in October statewide, down 32.3 percent compared to September and down 15.8 percent from October 2004, according to figures compiled by the Burbank-based Construction Industry Research Board. CBIA Chief Economist Alan Nevin predicts a decrease in starts for the remainder of the year.
"It is likely that permit activity will slow down in November and December, but even with that traditional year-end downturn, the industry will have produced a voluminous and broad range of single-family homes, condominiums and rental apartments in 2005," Nevin said.
Single-family housing starts in October totaled 11,120, down 27.6 percent from September but down just 3 percent compared to October 2004. Multifamily starts totaled 3,305 down 44.4 percent from September and down 41.8 percent from October 2004.
CIRB Research Director Ben Bartolotto said the drop-off in permits - which followed a surge in permits issued in September - may have been caused at least in part by builders pulling permits early because of new and more costly energy efficiency standards that went into effect on October 1.
Noting the state's housing affordability rate continues to plummet, Marceau said the Legislature must take steps to fix the problem, 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 some 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.
