(Updated to include figures dating back to 1946 and to add perspective)
An industry group reports 2007’s building permits for single-family homes and row houses dropped to the lowest level since at least 1955. (See history HERE based on data from the Construction Industry Research Board for 1967-2007; Security Pacific National Bank for 1946-1966, using a different method that slightly underestimated totals.)
Permits were issued for just 2,183 single-family homes in 2007, according to the Construction Industry Research Board, a Burbank-based industry center that tracks building permits statewide. That compares to a peak of more than 24,000 homes permitted in 1955 and down from 8,200 a decade ago. (See chart; click on it for bigger version!)
Total residential building permits, which includes homes plus apartments and condos in multi-story buildings, fell to a 14-year low in 2007 and the fifth-lowest number of permits since 1967. However, permits for apartments and condos in multi-story buildings hit a level not seen since 2004.
Irvine again led the county in new home construction, with 2,536 building permits in 2007, all but 230 of them for apartments or multi-story condo buildings. The city’s permit total is down from 3,530 units permitted in 2006. Anaheim and Orange issued the next largest numbers of permits: 875 in Anaheim and 826 in Orange, an increase for both cities.
Construction levels that boomed from the 1950s through the 1980s have tapered off in the past two decades as the county runs out of room to build. Homebuilders caught off-guard by the housing downturn also drastically cut production in the past 18 months to reduce their inventory of unsold homes.
The numbers show also that single-family home construction is dwindling as housing density rises in the county. The percentage of permits in the “single-family” category — consisting of detached homes and attached row houses, townhomes or side-by-side condominiums — fell from 94% of all residential construction in 1955 to 31% last year, the figures show.
Last year also marked the second consecutive year in which the estimated value of commercial and other non-residential construction ($1.98 billion) outpaced homebuilding ($1.79 billion.) The last time non-residential construction outpaced homebuilding prior to 2006 was in 1984, research board figures show.
Home remodeling also fell for a second straight year in 2007, dropping to an estimated value of $444 million, down from $515 million in 2006, the research board reported.
Less is more. Sounds good to me.
Yes but less construction means fewer jobs which means less potential home buyers out there.
Save money for a stormy year ahead. Stop spending lavishly and live within your mean. The worst has yet to come to Orange County and California.
OC housing has hundred of Entrances but very few Exits. Housing is not a buble until it busts.
Just waiting for affordable housing to return! There will also be a shift to building more apartments — we’re gonna need it!
if you look at the multi-family and total number of permits, 2007 is not such a bad year. It is still better than 1991-1993 period. The townhomes and condos were selling at 600K level. 5-10 years ago that would be a single family home price. This just means that more and more new homes will be muti-family properties.
Wow, what a revelation. New construction is down in a place where there is no longer any open space to build in. That is really shocking. In 1967, there were orange groves on every major street in the county. And look at that drop from 1969 to 1970. That was really the beginning of the end. No, maybe it was ‘82. ‘92 maybe? 1995? 2001? In ‘05, when we were still on the upswing, new construction was the lowest in 39 years. Did we read the doomsday headlines then? This is another in a string of ridiculous and irrelevant entries in this blog that clearly show the mind set of Lanser and his lemmings.
WaPo sent out alert that Bush and Dems have agreed on new stimulus package. In addition to tax rebates, etc., the package will:
“The package would temporarily increase the size of jumbo mortgages that can be bought by government-sponsored Fannie Mae and Freddie Mac, from $417,000 to as much as $700,000 in high-cost housing markets.”
“no longer any open space to build in.” Are you kidding? There’s plenty of space - developers just have decided to mothball most of the projects.
BTW, there will always be space even if there’s no more land - always room to go up.
Construction Hits 41 Year Low:
Yes indeed fellow bloggers it is true.
Many builders just sent the crews home.
Projects were scaped or halted mid term.
Shea homes off Glenwood in Aliso Viejo is empty.
Empty lots,
Empty Condos,
Empt SFH’s
I believe many of these builders who are stuck in projects will,
GO BK THIS YEAR / 2009.
I SCOTT THE FORTUNE TELLER HAVE SPOKEN,
O WAIT THAT IS PDU’S Job…….lloll lloll lloll RIbspliter.
Hey rants:
were you at?
put away your mountain bike and grab your snow board.
1′ of fresh powder in Big Bear.
2′ Expected through the weekend.
Hansel & Grettle rented through next month,
Might just have to turn and burn.
Better get out the AWD and the Chains.
Reminds me of growing up in Nor-Cal, hitting up Tahoe, I love it.
scott,
be careful not to take pdu’s job or else the old man is going to claim that i am sob, sor, rr, shockg and so on.
to your blogger out there,
there are 3 million people living in oc.
you can expect “a few” of them to disagree with you here.
jake,
there is a guy who used to believe that everyone has to agree with him.
the name is adolf hitler.
Yeah, and nationwide the RE slump is huge.
“That was the first annual price decline on records going back to 1968. Lawrence Yun, the Realtors’ chief economist, said it was likely that the country has not experienced a decline in housing prices for an entire year since the Great Depression of the 1930s.”
Truthi:
You are still young right?
You and your husband going to take advantage of the Snow?
Should be epic conditions once again in the SO CAL mountains.
Better get your Bear Mountain / Snow Summit tickets online as,
They are going to be sold out.
What do you think those resorts will look like in 2020?
I think all you guys out there should buy Big Bear RE on the down.
Lake in the Summer,
Mountain resorts in the winter.
It will never be as good as Tahoe,
But who is goint to Fly North to Tahoe,
Or drive to 8 hrs to Mamoth 4 to 6 times a year?
If you have Big Bear is just 2.5 hours with no traffic 3.5 with traffic.
Come 2020 it will be the vacation destination for
LA / SD / OC and untouchable.
Anyone priced out Tahoe RE?
Forget about it.
You would to have bough 10 years ago as,
It is the vacation destination for the bay area.
Please do not feed the idiot troll.
Dear troll:
I think in this case you have the slightest of points. The fact that construction is so low should be a plus for housing prices in the future. When that future will come is what all the debate is about.
Construction is in a downward trend in general but it also seems to go further down as the housing market stalls.
Again troll, we welcome your comments on housing under one name.
We know your “feelings” about Mr. Lanser and about other bloggers, and we would prefer you keep them to yourself or sprinkle them in lightly.
Even a troll can change his ways and change from an ugly repulsive thing to a beautiful attractive thing.
Give it a try troll, you might like it.
jake idiot is that your name?
if you are too dumb to know that sob, vor, rr, shockg are all different person, then you should not even try to post anything here.
you are just simply too dumb.
Scott, that isn’t Truthiness/Roc/Bored that is another person who took it upon them to make a name similar to Truthiness and play devil advocate tongue in cheek.. It has even wore thin on them and they probably should pick a new name anyway….so she Truthiness hasn’t been around lately, she usually shows up for the dead cat bounces we see from time to time, I was surprised she didn’t show up for the PPT bogus rebound yesterday.
adolf hitler
Yes, yes, I remember something about that guy from history class. He was the bad man, right? Or was he the guy who made beer in Colorado?
Don’t forget, 2009-2011 is already preloaded with thousands and thousands of units of housing that have been built and mothballed by the big homebuilders in 2007-08.
Lennar alone has thousands of units of housing in various states of construction on hold in Irvine and Anaheim. CentralParkWest on Jamboree has hundreds of built units being shrinkwrapped for long term storage in 2008. Lennar’s A-Town in Anaheim was zoned for 3,500+ units, the grading, underground infrastructure and streets are all finished, and now A-Town just sits there. Meanwhile, around the rest of the Platinum Triangle a thousand more units from other builders are still being finished, and/or being hastily converted to luxury apartments.
The housing stock in OC was so overbuilt in 2005-07, especially the shoebox condos in central OC that very few people actually want, that there is a massive backlog of mothballed and cancelled projects that will have to flood on to the market eventually once the recovery starts in 2010-12.
And don’t forget about the ill-conceived luxury towers around South Coast Plaza. Anyone drive by Skyline Towers off the 55 lately? Skyline is now just twin thirty story towers with no residents and a shuttered sales center on the corner. Skyline represents a few hundred more homes that will have to be put on the market eventually, at whatever price the distressed builder can get.
clemente,
adolf hitler started out making beer in colorado in 1901.
in 1920 he moved to germany.
in 2008, he changed his name to jake idiot.
VOR: no open space. So is that why builders are offloading land they purchased for pennies on the dollar since they decided that building on it would be a losing proposition?
Provide some facts - otherwise your comments are filed along with the rest of the permabulls’ - in the trash of lies and complaints.
Have you ever provided any real data to back up your claims? More and more you come across as being a young investor that lost their shirt in this mess. Good luck with that attitude and willingness to make something out to be less risky than it really is.
I have been wondering if the US will turn into Mexico, in that, construction skeltons of unfinished homes and buildings will start to appear here and there around the country.
Still, until lending begins to get traction (which necessarily needs house prices to fall or wages to go up) then we will not go anywhere with the housing market (except down).
I still want to know who the few buyers are, income, loan type, down?
about this lack of space thing, just go to hong kong and see for yourself how the chinese deal with this problem.
jake it is called hong kong not king kong.
english is your second language?
Am I being called a troll?? I put a pox on you sir!!!
Please don’t feed the troll.
Feeding the troll merely upsets it causing it to madly post.( every 7 minutes or so)
Please don’t feed the troll.
better yet, put both a box and a pox on him!!!
nbi,
Yes, there is some space left. There will always be something torn down, closed (Great Park) or the option of high rise building. But the point is that comparing current new building to the past is not valid because not only is land a diminishing commodity, but all kinds of other factors enter into the equation. The very chart used to show the downturn in building shows many ups and downs. Orange County was a very different place in the 60’s and 70’s. It’s just not a valid premise. But that doesn’t stop our esteemed journalist from publishing it.
Eat it in the OC:
“Still, until lending begins to get traction (which necessarily needs house prices to fall or wages to go up)”
There’s a third factor you missed: if conforming loan limits go up, which is apparently happening in the new stimulus package, then monthly payments become more affordable and credit becomes more available, so lending will get more traction. 30 year mortgages for conforming loans are at 5.25% now
*yawn*…yah yah yah…they are not making any more land, buy now or be priced out forever…blah blah blah.
The sky is the limit as far as housing is concerned. You cant fully compare old building to new six the housing mix is different. Also the lot sizes have shrunk since the 70’s. So more units have been built on less and less land over the years.
The bottom line though is that the OC will become more and more urbanized as time goes on. Many people will move into multi-story buildings, some choose that life style. There will of course be luxury type buildings and other not so luxurious, but still nice.
It is a mind set that is changing as the county evolves and the baby boomers retire.
I am curious to see what will happen with Fannie and Freddie. Will the increase in the conforming limit have an effect on the market?
I guess it has the potential to do so, since the jumbo loans seem to be holding some people back due to affordability. I still think though that it is more about affordability and credit worthiness overall.
If you dont have the down, the income or the credit, it wont matter how high the conforming rates go.
Certainly housing will go up in OC over the long haul, and we will tear down old housing and rebuild more densely. This has already been happening in the last few years (on hold now, of course). BUT, that’s like telling people who want an SUV that, sorry, only compact cars are available. People want single family detached homes and the opportunities to build new SFR’s in the OC will become increasingly limited over time due to population and geography. As this trend continues, it will add upward pressure on SFR prices here. This is the reverse of what we see in places like Atlanta or Houston, where new development on the edge of town acts to push down prices in the overall market. Now, I’m not talking the next year or two, but it’s the future of OC unless there’s a Malthusian population contraction, terrorists set off a nuke in the Port of LA, or the US becomes a third rate economy.
Within fifty feet of the triplex I rent in HB, two triplexes (housing six renting families) have been torn down and replaced by four brandnew TSM’s (Talls Skinny Monstrosities) in the last two years. No new land? Yeah, but….
PS two are still empty and unsold
Jake,
The multi-persona- creepy troll jumped on the mention of remaining developable land and overlooked ….
“Builders caught off-guard by the housing downturn drastically cut production in the past 18 months to reduce their inventory of unsold homes.”
Says it all.8enjoy3
Isn’t that just another way of saying they quit building more of what they couldn’t sell?
The Feds are making it more affordable every day for the people that already own a house. Just some of the stuff that is happening right now, or is going to pass soon:
- Subsidized mortgages for millions at 1-2% interest rates
- Conforming loan limits going up
- Bailout of the mortgage insurers to get the CDO market functioning again
- Proposal for a federal fund that will buy “problem” loans from lenders so they can go back to lending again
- Fed dropping rates for banks to borrow cheap
- Legislation/lawsuits stopping the forclosures to reduce inventories
Your government working to keep prices high so people will borrow against it (or sell it) to have enough money to retire on - so that the federal government won’t g bankrupt paying social security benefits.
Take a look at the situation from far above Bears. The government is doing this because they KNOW they are gonna run out of money in about 10 years and they have (with the early 2000’s stock run up and the present run up in home prices) repeatedly caused asset price inflation to accomplish this. And they will continue to do so.
This is the dirty little secret that those in Washington won’t tell you about.
SOB: so this now one big government conspiracy.
man - you guys are amazing. How’s that medication working out for you?
I own property, I invest heavily - even in today’s climate - and all I see from the Permabulls are a bunch of whiners that rely solely on their RE investments to preserve wealth. Good luck with that. Yeah - pick the one asset that has virtually zero liquidity and plenty of risk - that’s real intelligent.
This is just another sign the builders can’t sell any home in OC for overinflated current values. They know this so they just stopped building and probably won’t start again for a couple years or more.
Sorry owners, you will continue to lose equity until affordability returns.
JayHub: I’m betting on OC residential RE to turn around and appreciate again - so is everyone else on this blog. As you stated - it just isn’t going to happen this year or anytime soon.
I always love the obvious.
SOB,
some of those things may be true to varying extents. Those type of financial vehicles dont take months to come to fruition, but years. Much of what is already happend will continue to happen for at least the next year. By the time lending catches up, most of the resets and foreclosures will be long gone.
In my opinion, prices will come down for at bare minimum another 6 months to a year. How much is difficult to say. There are people buying. There are a lot of short sales and foreclosures that are 25-40% below the peak value from almost 3 years ago.
There are people who have downpayments/income/credit that can afford. That isnt the majority though or there would not be nearly 17K homes on the market. We are not at a bottom…that is just a fact.
Its going to take the fed’s six months just to cut a check to everyone.
My suggestion for you SOB is to hold on to your home, dont sell. You will see the paper equity you had in 2005 return sometime around 2010 or later. No worries. As long as you didnt get an exotic loan, or an HELOC…you will be fine.
I guess I wonder what do you care if the market comes down?
I still dont get your concern, unless you have a personal stake in the matter? DO YOU?
Fact -this is included in the economic stimulus package-
“To address the mortgage crisis, the package also raises the limits on Federal Housing Administration loans and home mortgages that Fannie Mae and Freddie Mac can purchase to as high as $725,000 in high-cost areas. Those are considerable boosts over the current FHA limit of $362,000 and the $417,000 cap for Fannie Mae and Freddie Mac’s loan purchases.” AP
# VoiceofReason Says:
“pdu thank you for proving my point. What I see in your graph are interest rates starting at the end of 78 at 10.35 on a steady climb to 18.45% in Oct 81. I don’t know how you could be a mortgage broker in OC during that time and not know about about the FHA plan 241 program. I used it twice during those years to buy houses. ”
Hey VOR,
I don’t need the likes of you to chastise me.
You claimed to use an FHA NegAM loan in 1978 to buy a condo and claimed that rates were 18% at that time (1978).
I told you that you were wrong on two fronts — FHA never had a NegAm loan and rates were in the 9-9.5% range in 1978.
What in hell rates climbing to 18.5% FOUR years later has to do with any of this is only indicative of how confused you are……confused, as in out of touch with reality.
Furthermore you are completely WRONG about the FHA 241 program. It never was a NEG AM and it never was a program for home purchase.
You did NOT use an FHA 241 to purchase two homes during those years.
A little info on the 241 program to show how wrong you are:
—-
FHA 2 4 1
Program Description
A supplemental loan under Section 241 is defined as a
loan for the purpose of financing improvements or
additions to a project covered by a mortgage insured under
any Section of the National Housing Act.
Eligible Property Types
Improvements or additions to a multifamily project,
nursing home, intermediate care facility, assisted living
facility, or group-practice facility.
Eligible Borrower
Borrowers who have an existing FHA-insured mortgage
Maximum Loan Amount
The maximum FHA-insured mortgage will be the lesser of:
90% of the cost of the improvement or addition or
equipment
Rates
Fixed rate for the length of the mortgage
—
To help you understand….an FHA 241 was a FIXED rate loan used for improvements to a property that already had an FHA insured loan on it — NEVER was a purchase loan….and never was a NegAM.
You continually post complete BS on this blog and insult the intelligence of all who read your nonsense….and I take offense at you having called me an idiot.
Although it may take up to 6 months for the stimulus checks to get here, people are going to spend NOW knowing that the checks are coming. That’s how it works.
One more thing VOR,
I never said I was a mortgage broker in 1978….I said mortgage banker….we did FHA loans.
It’s possible I would have done yours, had there really been such a loan available…….and one other problem, I’ve always been selective on who I do business with…………………..
not buying it Says: “JayHub: I’m betting on OC residential RE to turn around and appreciate again - so is everyone else on this blog. As you stated - it just isn’t going to happen this year or anytime soon. I always love the obvious.”
__________________________
Sorry, nbi, no argument, my earlier statement was ambiguous. I was talking about that we will “build” up in OC when I said we will go up. I agree also that long term RE in OC will appreciate, but not in 2008, absent the kind of nightmares I mentioned in my prior post.
Yeah “getreal” I read that as well, isn’ t that special a company that is almost insolvent and teetering on destruction is going to get more ability to move into higher home values. I can see nothing bad happening with this. /sarcasm off
don’t feed the jake.
don’t feed the jake.
don’t feed the jake.
i stop but don’t feed the jake.
pdu,
i am not vor, but you and jake idiot sound more and more like the same troll every day.
pdu,
you just bought a house right?
ha knife catcher!
From Freddie Macs website concerning subprime…
Taking a leadership role in the industry to ensure responsible subprime lending, Freddie Mac recently announced higher underwriting standards for the subprime loans we purchase. For example, we will invest only in subprime adjustable-rate mortgages (ARMs) – and mortgage-related securities backed by these subprime loans – that qualify borrowers at the fully-indexed and fully-amortizing rate. We will limit the use of low-documentation underwriting for these types of mortgages to help ensure that future borrowers have the income necessary to afford their homes and strongly recommend that mortgage lenders collect escrow accounts for borrowers’ taxes and insurance payments. These new investment requirements will affect mortgages originated on or after September 1, 2007, to avoid market disruptions.
In addition, Freddie Mac is developing fixed-rate and hybrid ARM products that will provide lenders with more choices to offer subprime borrowers. Freddie Mac’s new hybrid ARMs will offer reduced adjustable rate margins; longer fixed-rate terms; and longer reset periods. We will require originators to underwrite these products at the fully indexed and amortizing rate, and plan to commit significant capital to purchasing these loans into our retained portfolio.
Freddie Mac supports responsible subprime lending. However, forcing people into a subprime loan when they have the credit history to merit a better interest rate is a kind of predatory lending. Find out more about predatory lending and how Freddie Mac helps prevent it.
Tell me again how raising the conforming limit will somehow open the flood gates back to the good old days? Didn’t we just go down that path of cramming people into homes they couldn’t afford? Won’t it be near impossible to afford the full PIMI if you have a high affordiability index?
Eat that.
Truthi,
I’d invite you to dinner before I’d buy a house…………..
……in this market, that is:)
The package agreed upon by Democratic and Republican members of the House would allow government-sponsored Fannie Mae and Freddie Mac to buy mortgages at least 50 percent more expensive than the current $417,000 limit. The Senate and White House still must sign off on the proposed stimulus plan, which also includes tax rebates for Americans.
pdu, you sound like nanowest now. that is creepy……….
geez, this getting old. pdu, in 1978 and again in 1983 I had an FHA loan that either had an interest buy-down or some kind of artificially low interest rate. The unpaid amount was added to the balance. At the end of the 5th year, the interest rate converted to whatever the current rate was. I’m certain of these facts and I have no reason to lie. It may have been called something else than I remember. But does it really matter that much? My point was that any discussion of affordability has to include the ancillary lending factors of the time, and that just comparing home prices to wages isn’t the whole picture. That was a different subject. Can argue about this one please.
VOR,
…………….Good.
Just don’t taint the discussion with untruths stated as fact.
The interest rates in 1978 for FHA were in the 9’s until the end of the year when they hit 10….not 18% as you claimed.
FHA did not have NegAm loans as you claimed…..and still want to believe.
I don’t care what you believe, however, when you post them as facts then that should be corrected.
Claiming NegAms by FHA in 1978 would lead someone who didn’t know better to believe two erroneous things:
–That FHA condoned and offered NegAMs,
….and that Neg AMs were around 30 years ago, used by a typical buyer.
If you can find some obscure use of a neg am by someone 30 years ago more power to you, but they were not out there for general purchase loans and not by insured by FHA.
I agree that a discussion of affordability needs to include lending issues….that is why it’s important that you don’t distort the facts.
In 1981 when the rates went through the roof the real estate lost value and sales fell dramatically.
In 2007 when lending standards tightened real estate lost value and sales fell dramatically.
The drop in value and sales slowdown started before 2007 when the continuing rise in prices made property unaffordable for the masses.
Glad to see the real issue being discussed…….. Affordability.
There were no untruths. Just you saying that I’m lying. I’m not. I had two such loans, And your own graph shows interest rates climbing monthly to a high of over 18% by 1981. That’s two years of rapid rise. And your assertion that prices dropped is not correct. I bought the first property for $58k in 78 and sold ifor $81k n 80. Similar results the second time around. You can’t really believe that the lending industry just now came up with loan schemes to help sell houses. And please don’t roll out the stat sheet unless it is OC only. That’s what we’re talking about here. Not all of CA, or LA or Bakersfield.
VOR,
You are pathetic…… and you are wrong.
FHA is a Federal agency — identical rates throughout the US.
Rates of 9% in 1978 have nothing to do with rates of 18% in 1981.
Property sales and prices dropped in 1980-1981…..my goodness, rates hit over 18% !!!
One of two things….you weren’t there then, or your memory is not here now.
………….or maybe you’re just full of it :)
My vote of confidence is with pdu… he has data to back up his claims
These have been interesting discussion. Unless you are a greedy seller or the government needing the tax revenue, I can’t possible believe anyone thinks the current prices will remain as high as they are. Even with the lifting of the conforming limit to $700K+, who could afford such a loan at 5% per year? With insurance and property tax and a 20% down payment, the monthly payment is $4,939 for a $700K loan. That is fix for 30 years. How many family can afford that and still live a decent life? Without the gimmick loans and the lose lending standards, these prices cannot be sustained. Bottomline is that prices will have to come down significantly. Don’t get me wrong, eventually people can afford these prices but that is years from now.