California Again Sees Decrease in Housing Production in August, CBIA Announces
CIRB Revises Forecast Downward to 70,000 Units
SACRAMENTO, CA – September 29, 2008 – (RealEstateRama) — California homebuilders continued to cut back on new-home production in August while trying to sell off existing inventory in a housing market that’s still adjusting, leading analysts to further reduce homebuilding projections, the California Building Industry Association reported today.
According to statistics compiled by the Construction Industry Research Board, 4,484 permits were pulled throughout California, down 61 percent when compared to the same month a year ago and down 21 percent from July. Single-family permits totaled 2,241, down 58 percent from August 2007 and down 28 percent from July, while multifamily permits totaled 2,243, down 63 percent when compared to August 2007 and down 13 percent from the previous month.
During the first eight months of 2008, permits were pulled for 46,874 units, down 45 percent from the same period last year when 85,422 permits had been issued. Single-family permits were down 54 percent while multifamily permits dropped 30 percent.
CBIA Chief Economist Alan Nevin noted the decrease in single-family home production.
“We have been taken aback by the dramatic cutback in single-family home production in California,” Nevin said. “The Riverside/San Bernardino area has produced only 4,485 single-family units in the first eight months of the year, compared to 31,587 units in the first eight months of 2005. Most metropolitan areas have seen their single-family permit activity decline by half in the past year, with little indication of improvement in the last third of the year.”
Nevin said the decline in multifamily units has been less severe, off 30 percent in the first eight months of the year compared to the first eight months of 2007.
“Virtually every metropolitan area in the state, save San Francisco, experienced declines in the multifamily sector during the first eight months of the year compared to last year,” Nevin said. “In essence, the industry has come to a standstill with minimal indication of improvement during the balance of the year.”
CIRB is now projecting a total of 70,000 units for 2008, down from the 75,000 units projected last month, with only 74,000 units projected for 2009.
Robert Rivinius, CBIA’s President and CEO, said that with the amount of unsold homes on the market, builders are only going to build what they know will sell.
“Builders are finding it increasingly difficult to compete with the number of unsold homes currently on the market,” Rivinius said. “There are those buyers that want the benefit of purchasing a new home and everything that comes with it, but until the inventory of existing homes is largely sold off, builders will have no choice but to continue to cut back on production.”
Rivinius also noted that building only 70,000 units this year and 74,000 units in 2009 could lead to increased prices once the market turns around.
“When the inventory of foreclosed and unsold homes has been absorbed, California could face a shortage of new homes to buy, possibly leading to increased prices due to normal supply and demand,” Rivinius said. “Now is a good time to look at ways to ease regulations, reduce impact fees and streamline the entitlement process so that builders will be able to build homes faster and we might be able to save some of the affordability gains we’ve seen this past year.”
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The California Building Industry Association is a statewide trade association representing thousands of homebuilders, remodelers, subcontractors, architects, engineers, designers, and other industry professionals. 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.
Contact:
Michael Castillo
Communications Specialist
(916) 443-7933 ext. 346
mcastillo (at) cbia (dot) org
