Housing production in California was down slightly in 2005, but still broke the 200,000-unit mark for the second year in a row, the California Building Industry Association announced Thursday.

According to preliminary year-end data compiled by the Construction Industry Research Board, housing starts – as measured by building permits issued – totaled 207,154 during 2005, a 2.7 percent decrease from 2004. The total includes 154,816 single-family homes (up 2.2 percent from 2004) and 52,338 apartments and condominiums (down 15 percent).

“As anticipated, California concluded 2005 with the building permit count within 3 percent of what the industry recorded in 2004 – which was the highest total since 1989,” said CBIA Chief Economist Alan Nevin.

“Most metropolitan areas, as well as the more rural counties, experienced strong permit activity, with particularly vibrant construction in the San Joaquin Valley,” he said. “A turndown of activity in November and December is indicative of the modest slowdown we anticipate in 2006.”

In 2005, production levels were highest in Southern California – particularly the Inland Empire and Los Angeles County – and in the San Joaquin Valley.

For single-family construction, Riverside County remained No. 1, followed by San Bernardino, Los Angeles, Kern, and San Diego counties. In multifamily construction, Los Angeles County remained the leader, followed by San Diego, Riverside, Santa Clara, and Orange counties. Riverside remained the leader in total housing starts, followed by Los Angeles, San Bernardino, San Diego, and Sacramento counties.

Among counties with significant amounts of single-family construction, Contra Costa recorded the largest increase in 2005, with starts increasing by 26 percent and boosting the county from 11th to ninth place statewide. Kern County was close behind, with starts increasing by 23.6 percent and rising from sixth to fourth place statewide.

Among the top 10 counties for single-family production, the largest declines were recorded in Sacramento, down 23.3 percent, and San Diego, down 17.4 percent.

During December, single-family starts stabilized, falling just 1.2 percent from November but down 15.6 percent from December 2004. Multifamily starts – traditionally very volatile from month to month – declined by 30.8 percent compared to November and dropped by 57.9 percent from December 2004. Total starts for the month were down 11.2 percent from November and down 33.2 percent from December 2004.

In 2006, Nevin projects that housing production will drop slightly, to between 185,000 and 205,000 homes, condominiums and apartments statewide. He expects single-family production to decline from 2005 levels but believes multifamily starts are likely to increase slightly this year.

Despite the strongest two-year production numbers in 15 years, however, home builders still did not build enough new homes and apartments to meet the state’s unrelenting need for more housing, CBIA’s top official said.

“Given California’s constant population growth of between 500,000 and 600,000 people a year, the state needs about 240,000 new homes and apartments every year just to keep pace. Unfortunately, we haven’t hit that level since the late 1980s, and unless major reforms are enacted at the state level to allow increased production, it does not appear that we will reach it anytime soon,” said Layne Marceau, CBIA’s chairman and a San Francisco Bay Area home builder.

Marceau called on lawmakers to approve a package of bills designed to remove unnecessary regulatory barriers and spur production of new homes, particularly in the state’s major job centers.


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