In November, (last data available) builders filed 1,848 permits in SoCal for single-family units, a benchmark for construction of traditional ownership residences. That’s nearly double
Builders Double Permits for New Construction | Apartment Permit decline
Dated: January 20 2021
In November, (last data available) builders filed 1,848 permits in SoCal for single-family units, a benchmark for construction of traditional ownership residences.
That’s nearly double the five-year low of 947 from April, when the economy was all but locked down.
It’s also up 23% in a year and the sixth-consecutive month of double-digit percentage gains in this planning metric.
That’s the longest such streak in six years.
Conversely, 1,429 plans were made for multi-family homes — primarily apartments — a 6% dip in a year for Los Angeles, Orange, Riverside and San Bernardino counties.
It’s the seventh straight drop — the longest streak since the Great Recession — and a sign the rental market looks unattractive to developers.
The fastest growing area are the Inland Empire In Riverside and San Bernardino counties, November saw 1,014 single family permits, up 29% from a year earlier and 18% above the five-year average.
In Los Angeles and Orange counties, 834 single family new permits were up 15% from a year earlier and 3% above the five-year average.
Yet it’s not the current sales count that’s getting builders building; they simply have (virtually) no inventory remaining to offer home buyers.
CoreLogic/DQNews reports that builders in the six-county region sold 1,962 newly constructed residences in November — down 11% in a year vs. sales of 19,815 existing residences — up 23% in a year.
The builders’ excitement is “signed contracts to buy” are soaring, a trend that foretells of future profits.
According to the new-home trackers at Zonda, pending sales in the Inland Empire in November ran 64% above a year ago while the L.A.-O.C. market saw a 41% increase.
According to says Ali Wolf, Zonda’s chief economist. “Local new home builders report that demand is as strong as ever.
The limiting factor today holding back greater sales growth is the lack of supply.”
“Watch for the second-order effect of a supply/demand imbalance, through continued home price appreciation” says Wolf.
The number of permits suggests homebuilders are playing the long game and buying into the long-gradual running upswing cycle.
Builders are a risk-averse group and typically prefer a “wait and see” response to the homebuyer driven.
The industry was caught off guard by house hunters’ sudden pandemic-era demand for less costly, cheaper inland, communities.
Once the summer’s buying surge reduced inventory to praticallyzero in new home communities, builders became convinced the surge is a sign of times to come.
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