Friday, September 2, 2011

Housing Construction Takes Steep Plunge in California

Housing production took a sharp and sudden decline in the nation's most populous state in July, posting the lowest level of permits since January 2009.

According to the Construction Industry Research Board, permits were pulled for just 2,248 housing units in July. That's 45% fewer than the same month a year ago and 53% fewer than in June. The last time construction activity dipped this low was 30 months ago, when permits for a mere 2,104 units were handed out by local building departments.

Permits were issued in July for 1,436 single-family houses, a 30% drop from June 2010 -- and a 39% slide from the previous month. Permits also were issued for 812 multi-family units, a 61% tumble from June. During the height of the housing boom, 2,248 permits in one month was considered normal in Orange County alone.
For the first seven months of the year so far, permits were pulled for 25,304 total units, down 2% when compared to the first seven months of 2010 when 25,754 permits were issued. Permits for single-family homes were down 18% while permits for multifamily units were up 23%.

Mike Winn, president of the California Building Industry Association, called the July figures "disappointing" and blamed the slump on the lousy economy. He said home builders are struggling to keep pace with last year's production rate, which was the second lowest year for housing production in history.

"Builders are still competing with a glut of foreclosed and distressed properties while buyers are sitting on the sidelines due to tight lending restrictions and the current climate of economic uncertainty," said Winn. "This has created the ‘perfect storm' that continues to work against us, but the construction industry is resilient and we will navigate through this just as we've done in the past."

Meanwhile, the research board has dropped its 2011 forecast to 46,700 total units, down from its previous estimate of 51,000. That would put 2011 just a hair ahead of 2010's 44,762 permits, but still down from the 64,962 units permitted in 2008.

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