California building permits set to hit record low

California builders are likely to pull only about 72,000 permits to build new homes in 2008 -- one-third the number issued in 2005 and the lowest number since tracking began in 1954, the California Building Industry Association said today.

Single-family permits issued in July totaled 3,023, down 48 percent from a year ago and 25 percent from June, CBIA said, citing statistics compiled by Construction Industry Research Board. Multifamily permits totaled 2,145, down 40 percent from a year ago and 19 percent from June.

For the first seven months of the year, permits issued were down 44 percent from a year ago, to 41,823. Single-family permits were down 54 percent, while multifamily permits dropped 24 percent. Riverside and San Bernardino accounted for 30 percent of the decline in single-family permits issued during the first seven months of the year, CBIA said.

Although multifamily permits issued are up in San Francisco, Riverside-San Bernardino and Sacramento, that's largely because of new rental apartment construction, the group said.

Robert Rivinius, CBIA's president and CEO, predicted the drastic reduction in new-home construction in the state will lead to another cycle of rising prices once inventories of foreclosed homes are reduced.

"When the dust settles and the inventory of foreclosed and unsold homes has been absorbed, there could be a shortage of new homes to buy," Rivnius said. "We are building less than a third of the new housing units needed to keep up with California's growth and that will ultimately drive up prices. We have seen an increase in affordability, but that will disappear at some point."

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