Housing Production Drops Nearly 11 Percent in October
Builders will continue to scale back production for remainder of 2006
November 29, 2006
Contact:
John Frith
CBIA Vice President/Public Affairs
(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 starts by type and by metro area is available on the CBIA Web site.
SACRAMENTO — Due to a changing market with a high level of new homes for sale, overall housing production dropped by nearly 11 percent in October compared to September and by 29 percent compared to October 2005, the California Building Industry Association announced today.
In October, permits were pulled for 6,031 single-family homes statewide, down 13 percent from the previous month and 46 percent from October 2005, while multifamily housing starts — condos and apartments — totaled 4,489, down 7.6 percent from the previous month but up 28 percent from October 2005. Overall for the month, builders pulled permits for 10,520 homes, condos and apartments, according to statistics compiled by the Burbank-based Construction Industry Research Board.
During the first 10 months of the year, total housing production is down 21 percent from the same period last year
CBIA Chief Economist Alan Nevin said that new-home construction in California is expected to continue cooling off for the remainder of 2006, and predicts that the year will end on the lower end of his 170,000-180,000 permit projection.
“The primary decline is in the single-family sector, where half of the decline is in the Riverside/San Bernardino, Sacramento and San Diego areas. On the multifamily side, we are now 6 percent ahead of last year's 10 month statistics. Much of that multifamily activity relates to higher-density projects in the major metropolitan areas of the state,” Nevin said.
Nevin predicts that multifamily construction will remain strong in most markets and projects that multifamily construction this year will total between 45,000 and 55,000 units. However, he said single-family starts are expected to drop to between 125,000 and 135,000, compared to nearly 155,000 in 2005. Even with the decline, total production this year is expected to be the sixth-highest since 1989.
Robert Rivinius, CBIA President and CEO, said that builders will continue to reduce their standing inventory of unsold homes that are under construction or completed, which makes it a great time to buy a new home.
“Even with all that has happened in the marketplace, however, California still remains the second least-affordable state in the nation, and with a limited supply of land and very high costs of government regulation and impact fees, we really can’t see new home prices dropping in the future,” Rivinius added.
“While there remains great pent-up demand for lower-cost homes, government constraints now make it all but impossible to build homes for first-time buyers, so most builders have no choice but to build homes to meet the demand in the higher price ranges”.
He said that needed reforms include making more land available for development in a well-planned, orderly way; streamlining the approval process; and reforming the state’s environmental laws, which are too often used not to protect the environment but instead merely to stop or delay growth.
In addition, he said local officials need to take a close look at the so-called “developer fees” they charge, which are really hidden taxes passed along to the new-home buyer. In many cities, fees total more than $50,000 per home and today fees in excess of $100,000 per home are not unheard of.
###
The California Building Industry Association is a statewide trade association representing some 6,700 businesses - homebuilders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals. A recent study determined that homebuilding generates approximately $68 billion a year to the California economy and creates an estimated 487,000 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.
