San Diego’s homebuilding slump

San Diego County is on track to build fewer homes than it did last year, said permit records released this week.

Residential building permits for all homes — condos, apartments and single-family homes — are down 18 percent in the first nine months of 2017 compared to the same time last year, said the Real Estate Research Council of Southern California.

The only county with slower building was Orange County, which had a 21 percent reduction. All other Southern California counties had an increase in building in the first three quarters.

The findings come at a time when local and state politicians are adopting policies aimed at increasing residential construction as a way to slow rising prices or limit commute times for environmental reasons. A San Diego Housing Commission report in September, produced along with two city councilmen, said the city needed to triple its yearly housing production.

San Diego County had 6,054 permits issued, down from 7,412 permits from the same time in 2016. The county had produced roughly 10,000 units by the end of 2015 and 2016. To reach that number, the county would have to build nearly 4,000 homes in the last quarter of the year.

The slowdown is led by a drop in permits for multifamily construction, down by 2,209 permits, or 40 percent, compared to the same time last year.

Real estate analyst Russ Valone, president of MarketPointe Realty Advisors, said fewer new builders are coming to town because of land costs. He also noted that some lenders are wary of new projects because rent increases for high-end apartments has slowed.

“As those newer projects’ rents push into the mid-$2,000 a month range, we started to see a slowdown in the rate of increases,” he said. “I think you may have some lenders looking at the slowed increases and starting to take a cautious view of the marketplace.”

However, he said many of the large apartment and condo projects being built right now had permits pulled at the end of 2016, so its possible the data isn’t as significant. The county has been building more apartments than traditional homes since the end of the Great Recession.

But one increase so far this year? Single-family homes are up, producing 851 more homes than the same time last year.

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