Single-Family Home Construction On Pace To Hit All-Time Low; Builders Focus On Apartments
Building permits issued throughout Los Angeles County in September reflected the relative strength of apartment construction and the historic weakness in the single-family market statewide, the Los Angeles/Ventura Chapter of the Building Industry Association of Southern California reported Monday.
According to data compiled by the Construction Industry Research Board (CIRB), there were 194 single-family permits pulled in L.A. County during the month while 626 multifamily permits were issued. In all, 820 units were permitted during the month, down 40.5 percent from August but up 97.1 percent from September 2010.
The trend toward apartment construction and the sharp downturn in single-family construction becomes even more apparent when the year-to-date figures are examined. During the first nine months of the year, there have been 7,574 permits issued countywide, 34.9 percent above the same period last year. But while single-family permits are down 2.3 percent to 1,786, multifamily permits are up by almost 53 percent to 5,788.
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Multifamily construction is outpacing single-family construction by more than 3 to 1 this year. And while L.A. County has traditionally seen more apartments and condos built than single-family homes, the ratio during the middle part of the past decade were closer to 1.5 to 1.
In fact, CIRB now projects that just 21,500 single-family homes will be built this year statewide, compared to 24,500 multifamily units. And while total housing production is expected to be slightly higher than reported in 2010, annual single-family production is expected to be the lowest since records began being kept in 1954.
The same trend is also seen in Ventura County, where during the first nine months of 2011 there were 458 multifamily units permitted and only 116 single-family homes. During September, however, just 18 single-family permits and no multifamily permits were issued countywide.
“Apartment construction in our region remains relatively strong due to demand for rental units in a troubled economy and because construction financing is far easier to obtain for rental projects than for-sale development,” noted Holly Schroeder, the Chapter’s chief executive officer. “On the for-sale side, while mortgage rates are at historic lows, lending standards are so stringent that many people with solid jobs still can’t qualify, and new homes are competing with a growing number of foreclosed homes hitting the market as banks ramp up their foreclosure process.”
Looking at permits by jurisdiction in the two counties, the city of Los Angeles led the way in September with 44 single-family permits and 581 multifamily permits, including a 478-unit mixed use apartment project at the corner of Wilshire Boulevard and La Brea Avenue being developed by BRE Properties.
A total of 59 units were permitted in the unincorporated areas of L.A. County, including 41 single-family homes in the Santa Clarita Valley. In fact, builders began construction on 45 single-family homes in the city of Santa Clarita and unincorporated area surrounding it, the most in the region. Construction also got under way on a 33-unit affordable rental project on Pico Boulevard in Santa Monica.
Clearing up a previous question in Ventura County, Oxnard submitted a revised report indicating that it permitted 272 apartments in July at Shea Properties’ Artisan project near St. John’s Regional Medical Center, not the 514 units that had been mentioned in the August BIA press release. Year to date, Oxnard’s 337 housing starts is by far the most in the county.
Schroeder said the weakness in single-family construction, which historically has been more consistent than multifamily projects, is further proof that local governments need to work more closely with homebuilders to allow projects to pencil out.
“It’s critical that cities, counties and school districts around the region reduce their developer fees, which average $50,000 or more per home, or at least to defer collecting the funds until the home is completed instead of when the building permit is issued,:" Schroeder said. "These steps would help our members build more and help get the state’s economy moving again."
BIASC is a non-profit trade association representing some 1,000 member companies in the housing industry, construction trades, and affiliated businesses throughout Southern California. The Chapter, one of four that make up BIASC, serves homebuilders in Los Angeles, Ventura and southeastern Kern counties.
The Construction Industry Research Board (CIRB) is a Burbank-based nonprofit research center established in 1974 to provide statistical information on the California building and construction industry. More information is available on the CIRB website.