Housing Production Continues Decline in November, CBIA Announces

Single-family starts once again set new all-time low, emphasizing need for stimulus package

SACRAMENTO, CA – December 24, 2008 – (RealEstateRama) — Single-family housing production in California in November was the lowest month on record, prompting the California Building Industry Association to urgently call on state and federal lawmakers to act immediately to stimulate the housing sector and the economy. Specifically, homebuilders are proposing a tax credit for new-home buyers, which has proven in the past to be an effective means of reviving depressed housing markets and reinvigorating job-generating home construction.

According to statistics compiled by the Construction Industry Research Board, just 4,544 permits were pulled throughout California during the month of November, down 17 percent when compared to the same month a year ago and up 8 percent from October due to a large increase in multifamily permits in Southern California. On a seasonally adjusted basis, the annual rate of production for single-family homes was just 23,300, the lowest on record.

Robert Rivinius, CBIA’s President and CEO, said that these numbers indicate the vital need for action by government – at the state and federal levels – to enact measures to stimulate the depressed housing market and in doing so, stimulate the state and national economy.

“We believe a tax credit will stimulate renewed activity in the housing markets throughout the state and the nation, as was proven in the 1970s when Congress, in a similar situation, enacted a temporary homebuyer tax credit,” Rivinius said. “Within months of its enactment, home sales doubled and within two years, new housing construction nationwide was back to normal levels. If we could get something similar enacted now, we believe it would go a long way in stimulating not only the housing market, but the statewide and national economy as well.”

Single-family and total new housing units showed double digit declines in all of the states 28 metropolitan areas, while multifamily units saw a slight surge. Single-family permits totaled 1,408, down 54 percent from November 2007 and down 40 percent from October, while multifamily permits totaled 3,136, up 30 percent when compared to November 2007 and up 70 percent from the previous month. Multifamily housing starts tend to vary widely on a month-to-month basis while single-family starts tend to be more consistent.

During the first 11 months of 2008, permits were pulled for 60,293 units, down 43 percent from the same period last year when 105,504 permits had been issued. Single-family permits were down 52 percent while multifamily permits dropped 28 percent.

For all of 2008, production is expected to be less than 64,000 new homes, condominiums and apartments, the lowest level since records began being kept in 1954, and the current projections for 2009 point to an even lower level of construction at 62,000 units.

Rivinius noted that the state’s lagging economy is not likely to recover until homebuilding begins to recover.

“California’s economy can’t afford another year of depression in the housing sector,” said Rivinius. “Studies show that the state economy benefits greatly when housing production is operating at healthy levels, and we just can’t stress that enough.”

Because of the sharp drop-off in homebuilding, California has lost nearly 300,000 jobs and $46 billion in economic impact in just the last three years.

“State leaders need to consider the profound economic and fiscal benefits of building new homes as they contemplate how they are going to balance the budget and bring the state’s fiscal house back in order,” he said. “New-housing construction creates jobs, generates revenue for state and local coffers and puts California back on the path to economic prosperity. The time to act is now.”

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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.

Contacts:

Michael Castillo
Communications Specialist
(916) 443-7933 ext. 346
mcastillo (at) cbia (dot) org