Construction Industry Research Board figures out this month show that permits for new home construction dropped 94% in Orange County last month.
The board reported that 74 building permits for new homes were issued here in August, compared to 1,302 the same month last year. August’s building permit number is just one-tenth the average number for an August in the past 20 years.
The decline was due to a dramatic drop in the number issued for multi-family units. Local governments issued just five multi-family permits, compared to nearly 1,200 the same month last year.
But single-family home permits were down as well, off 41% from a year ago, the board reported. Builders pulled 69 permits for single-family homes — consisting of houses, townhomes and other side-by-side condos — about one-eighth the number in an average August.
During the first eight months of 2008, permits were pulled for 2,419 units in Orange County, 988 for single-family homes and 1,431 multi-family units (consisting of apartments and multi-story condos). That’s less than half the number issued during the first eight months of 2007.
The California Building Industry Association reported that the slowdown is occurring statewide as builders cut back on production and attempt to sell of completed homes that are sitting empty. The Inland Empire has seen some of the most dramatic cutbacks in construction, the association said, with just 4,485 single-family building permits issued this year so far, vs. 31,587 in the first eight months of 2005.
“In essence, the industry has come to a standstill,” a BIA news release quoted its chief economist, Alan Nevin, as saying.
The drop prompted the BIA to lower its projected permit total for the state to 70,000 units, down from 75,000. During the boom years, production exceeded 220,000 units a year.
BIA officials noted that the slowdown in production will lead to a shortage of new homes once the housing market recovers, helping again to make affordable homes unattainable in the state.
Read more about homebuilding:
- Builders’ discounts average $22,900 in O.C.
- Fed sees languishing demand for West’s housing
- Builders shave $430,000 off new O.C. house prices
- Lennar wants meaningful home aid
- Sales halted at San Clemente oceanview villas
- Tustin is O.C.’s homebuilding hotspot
- O.C. builders shy from new stores, cut plans 61%
- O.C. homebuilding runs at slowest pace in 60 years
It’s been hectic lately, so, we can’t blame you if you missed of few of these Orange County business gems …
- Chic O.C. Mexican grill expanding to Huntington Beach resort development
- Is this prizewinner a remedy for fat kids?
- Discount retailer to open big O.C. store
- Early Sept. O.C. home sales take biggest jump in 5 years
- Family incomes in four O.C. cities among nation’s highest
- O.C. firms launch ‘Apple store’ of the airline industry
- Experts to Cindy McCain — more Botox, surgery would help
- Banks discount O.C. homes 30% at foreclosure auctions
- Laguna Hills Nursery closing but having big sale
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hahah, the slowdown in building will soon make housing not attainable according to the BIA, yes when the market recovers, so when is the market going to recover and when are incomes going to match the historice debt ratio’s which should be required to purchase a home in California? well I say like never.
ITS ABOUT TIME!
As a general contractor in orange county, things are looking bleak. Residential construction is dead as a doornail. The only thing being built is commercial and even that is not very strong. A lot of people are having a tough time. Architects, realtors, builders, home inspectors, etcetera. I know people who have been in the game for 30 years or more who aren’t able to make it in their field any longer. The picture doesn’t look like it’s going to get any better for quite a while. Unless home prices drop to a level at which lenders will loan money, or income levels increase to the level at which they can afford the over-priced homes, this current mess will continue.
With the drop off in home construction both the County Planning and City Planning Commissions need to reevaluate the building criteria for new homes.
Recommendations:
1. ALL new home constructions must have solar power for electricity. The units must be able to provide 100% of the daytime electricity demands for the home. Reason: The power grid problem has not been brought up to date.
2. All new home construction have backup generators. Reason: Earthquake will disrupt the energy system and with backup generators , home would be able to be self sustaining until the emergency passes.
There is nothing worse than being in any home without water or power for extended period of time.
We need to be proactive in planning for the future.
Yes it was defeated! No bailout for the greedy…………… Made my day!
Yes!!! NO BAILOUT FOR GREEDY BANKS AND STUPID SPECULATORS. LET ASSETS FALL TO WHERE THEY ARE SUPPOSE TO BE.
There is going to be a “re-vote” at 6:00pm Pacific Time. They probably waited for the “no” votes to leave DC to go home and campaign…
Good! The developers have been just as unbridled and unconscionable (sp?) as the banks making sub-prime loans.
They claim that if they don’t build, housing will become unaffordable, and then they build houses priced at One Million Dollars and more.
How is that helping, aside from making OC so crowded and destroying the quality of life so much that no one will want to live here, and property values will plunge?
Pack up, go away!
And let’s not even get started on the fact that the construction industry is THE largest employer of illegal alien labor!!!!!
So how will this bailout improve sales rates?
By allowing buyers to borrow more than they can payback AGAIN?!?
Now the Fed, which is the business of increasing homeownership, is now going to be the holder of thousands of foreclosed assets.
Bunch of idiots. Back in ‘04, they should have pulled the plug on any loan where the borrower was leveraged at or over 40% DTI - that would have solved the problem
Can anyone tell me how limiting borrowers to loans with a max principle at 3.5X income would not prevent a bubble? If people can’t make decisions for themselves, and now we all have to pay for it, wouldn’t it be fair to ask for such requirements?
Anything over that and the family is feeling the pain of that mortgage. keep in mind that all income streams would be accounted for - so landlords, investors and small business owners would still be able to manage - unless someone is lying on their taxes somewhere.
is there a reason why such a law could not be put into affect seeing that speculatory home buying can cause serious systemic problems?
Not to mention keep the majority of Americans safe and happy in their homes
And keep the foreign investor secure in their supplying of cash to the US
there is no bailout that can save the US Debtor nation
ball game over
Definition:
deleverage
(finance) To reduce debt in by rapidly selling assets.
this is just another day in the collapse of the US financial system.
Unemployment will go up, and of course home prices will drop significantly. I hope that some of the knife catchers out there are learning their lesson.
Stocks just like houses should never be bought in a down market. It’s much better to miss the bottom than lose 30% of your investment.
Nbi- I think and hope now that the bailout got rejected the banks will be forced to regulate themselves. This will be an eye opener for our financial system and hopefully banks will return to basic fundamental lending. Lower DTI’s and higher downs. Credit should be a foot in the door and the better the credit the further your foot gets in the door but during the bubble credit was king. If you have decent credit that opens your application but you should be qualified based on your income and assets. Credit shows past behavior and is a good indicator but it should not be an absolute as it has been in the past.
It is going to be very painful getting through this time but I feel confident we will be much stronger on the other side. The market needs to correct itself and the market will evolve and adapt. This will insure if the banks, investors, speculators and home buyers want to take risks will be held accountable.
college tuition will be going down
home prices will be going down
the price of cars will be going down
debtors fueled a massive asset bubble, it will be deflating for quite some time
mav Says:
“college tuition will be going down
home prices will be going down
the price of cars will be going down”
It all sounds good to me. I’m glad to see that only people who actually make money or have money will be able to buy, instead of people who borrow like drug addicts.
Misleading statement: “BIA officials noted that the slowdown in production will lead to a shortage of new homes once the housing market recovers, helping again to make affordable homes unattainable in the state.”
How does this make any sense? What is the difference between an inventory of 1000 new homes homes selling at $500,000 or an inventory of 5,000 selling at $500,000 when most people do not have the necessary income to even buy a $400,000 home? The assumption here is that when the housing market recovers, they expect affordable housing to be attainable because somebody will be selling their house for $150,000. Yeah, where? IE? There’s over 50,000 homes in the IE selling for $150,00 now and when the market recovers, guess what? It’ll still be there. We have a whole bunch of inventory sitting vacant and unsold in the IE.
Affordable housing in O.C. has never been attainable and never will be. Back in 1999 when O.C. housing was “affordable”, people were not buying in droves. It wasn’t until the appearance of subprime/Alta-A did housing suddenly become “affordable”.
The BIA has no idea what they’re talking about and is just a shill for the real estate selling industry.
OCTrojan - its just more scare tactics to prop up their product
We use every tactic in the book to sell our product - fear tactics are high on the list - I won’t mention the products but keep in mind, they are not consumer.
The ONLY WAY home values can become misaligned with incomes is either (1) the lending practices loosen to the point that allows buyers to purchase homes they cannot afford or (2) the buyer domain grows to include more non-local buyers
Last time I checked, loose lending standards only benefit the scandalous and NYC has not gotten the same hit on RE values as the OC since their buyer domain is about four orders of magnitude larger than ours in the OC - which is why their home values can be even more misaligned with local incomes than us and they see less of the impact of this downturn.
Home values will continue to fall locally near term - those with cash will win out (about 1/4 of my employees) and then home values will rise again. I just hope next time its not the same fiasco. Twice is enough for everyone.
The OC seems to be the only place I know of where people refuse to believe that local incomes do NOT impact local RE values.
The same people that are always screaming that RE is local.
Irony I tell you