California’s home builders will likely begin construction on as many homes and apartments in 2005 as they did in 2004, but will still fall nearly 40,000 units short of the amount of new housing that is needed to meet continued strong demand, according to a housing forecast released today by the California Building Industry Association.

The forecast, authored by CBIA Chief Economist Alan Nevin, projects that California will see a total of 210,000 housing starts in 2005, equaling 2004’s production numbers. Last year was the first year since 1989 in which construction began on more than 200,000 new homes and apartments.

“Impressive as these numbers are, it should be remembered that California’s home builders are still not meeting the state’s housing need. Nearly 250,000 homes and apartments are needed each year to accommodate the state’s growing population,” Nevin said, adding that in the late 1980s, an average of 255,000 housing units were permitted statewide each year.

Nevin expects that permits will be issued for 155,000 single-family homes, matching the units produced in 2004. He also said prices of single-family product should increase 4 percent to 5 percent on average statewide.

On the multifamily side, he forecast that 55,000 apartments and condominiums will be built, adding that the split between the two can’t be determined because many projects originally permitted as rentals convert to condominiums prior to completion.

The forecast excludes apartment-to-condo conversions since conversions do not add to the overall housing supply.

The report also includes analyses for the state’s major metropolitan areas. Nevin said most regions will see similar new-housing construction levels as in 2004, with the Inland Empire, Los Angeles County, and the Sacramento-San Joaquin Valley areas having the highest production levels.

The California Building Industry Association is a statewide trade association representing more than 6,000 industry professionals.


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