what is really interesting is the comments that people are making at the end of the article… looks like we may have a few friends that feel the same way..
Home construction plummets 53 percent
By: DAVE DOWNEY – Staff Writer
The pace of home building in Riverside County, the epicenter of California’s recent housing boom, has slowed to less than half what it was a year ago, a report released Monday by the California Building Industry Association shows.
For the year to date through July, Riverside County and its cities issued permits for 7,444 single-family homes, a steep decline of 53 percent from 15,826 for the same period in 2006, according to statistics compiled by the Construction Industry Research Board. The board is the research arm of the state association.
Building activity in the multifamily market has slowed even more. After taking out permits for 3,216 apartments and condominiums in 2006, home builders have started work on just 1,447 such units this year, statistics show.
“We’ve been on this trend for a number of months,” said Borre Winckel, executive director for the Riverside County Chapter of the Building Industry Association of Southern California. “We’ve been trending fully 50 percent below last year.”
Winckel said area residents can expect that trend to continue through 2008, accompanied by a moderate decline in home values.
Meanwhile, Temecula has bucked the trend so far this year. Single-family housing starts through July totaled 586, up from 439 last year, said Diane Ball, an administrative assistant in the building and safety department. Calls to Murrieta and Lake Elsinore building departments were not returned Monday afternoon.
State association representatives blamed the regional slowdown in part on the turmoil in the mortgage financing business.
With a wave of foreclosures locally and around the country, particularly among buyers who had shaky credit and stretched to get into homes, lenders are tightening qualifications for taking out loans. As a result, families are being priced out of a market that was within their reach — if only temporarily, through interest-only and adjustable mortgages — this time last year.
“The down payment is back,” said Robert Campbell, a San Diego economist who publishes a newsletter advising people when to invest in real estate.
The industry also blamed the dramatic slowdown on the stalemate in the resale market.
Analysts say many buyers of existing homes are refusing to make purchases unless sellers offer steep discounts, and sellers are refusing to budge on prices, in the hopes of getting what their neighbors did at the height of the boom.
“We have this curious phenomenon, where everybody is waiting for a better opportunity,” Winckel said.
Building activity in Riverside County was particularly slow in July. Housing starts for single-family homes were off 66 percent, from 2,022 in July 2006 to 692, according to the Construction Industry Research Board.
The numbers reflect a slowdown throughout California, with biggest declines concentrated in the Inland Empire and Central Valley. Statewide, housing starts for single-family homes are off 35 percent, from 74,740 for the first seven months last year to 48,321. Builders are on a pace to frame about 83,000 houses for the year, well below the range of 110,000 to 120,000 forecasted by the state association in January.
Construction totals likely won’t come close to matching the trade group’s forecast of 31,000 to 35,000 houses this year in Riverside and San Bernardino counties combined. The counties are on track to reach 21,000.
Winckel said the downturn is concerning because home building accounts for about one-third of Riverside County jobs, either directly through construction or indirectly through sales of appliances, lawn mowers and other items used in the home.
“We are very concerned about the spillover of the woes of the housing market into the general economy,” he said.
Winckel said builders also are concerned about their livelihood.
“We’re not looking to go from bust to boom again; we’re just looking to get back into the business,” he said.
Winckel urged potential buyers not to sit on the sidelines, saying they can take advantage of the swelling inventories of for-sale signs in neighborhoods all over the county.
Campbell predicted most buyers won’t.
“We’re in a hurricane right now. The leading edge of the hurricane is hitting us with full force,” he said. “You think people are going to jump back into this market after what’s happened the last year and a half? No way.”
— Contact staff writer Dave Downey at (951) 676-4315, Ext. 2623
READERS COMMENTS:
Easy call wrote on Aug 28, 2007 7:14 AM:
” Wait one to two years and you’ll be able to save at least 20%, perhaps 50% in some cases, as more and more houses fall into foreclosure. ”
jack wrote on Aug 28, 2007 7:46 AM:
” Bwahahahaha. Looks like the “realtors” will be biggy sizing it for you real soon. “Fries with that, sir?” Couldn’t happen to a more honest group of con men. Bwahahaha! ”
Concerned-1 wrote on Aug 28, 2007 8:16 AM:
” This is a needed correction in the market. For those who can hang on, everything will be fine. For those who have over extended, oh well. I personally hope the market is not over run with greedy investors snatching up foreclosures, but that’s life as well. The market will return. California is still California. ”
Concerned-1 wrote on Aug 28, 2007 9:44 AM:
” This break in the action may allow construction companies to reorganize and eliminate the illegal labor component. Just a thought. ”
Floyd wrote on Aug 28, 2007 10:36 AM:
” And let’s not forget the population shift, in which more people are leaving than arriving. It’s bad enough that most people can’t afford the product; soon there will be nobody around interested in the product. ”
Thanks Greenspan wrote on Aug 28, 2007 1:19 PM:
” Glad to see that the fake economic boom over the last several years has come to a close. Holding the fed funds rate at one percent for too long helped fuel this craziness by flooding the market with a sea of cheap money. I’m not holding my breath, but I hope someday this country can spawn a generation of financially prudent young adults. A good start is to make it difficult to finance a home! ”
Roripauh Ranch? wrote on Aug 28, 2007 6:28 PM:
” HA HA HA HA HA HA HA HA HA HA HA HA….That place will never get finished…HA HA HA HA HA HA HA HA HA… ”
GFN wrote on Aug 28, 2007 7:20 PM:
” Concerned-1…my opinion and mine alone…this is way more than a simple correction, even more than a fairly complex correction. Every area of our society is over extended by a terrific amount. I can’t get people to invest in a house that would sell at a 20% discount from the lowest appraisal. This is serious; get ready to take care of family and friends. C-1, I respect you a lot; remember this. ”
to Roripaugh Ranch wrote on Aug 28, 2007 7:32 PM:
” I say to turn Roripaugh Ranch into a large park (on the order of Golden Gate Park or something) since it has been just sitting there for years and has a fancy looking clubhouse sitting vacant! ”
jack wrote on Aug 28, 2007 8:20 PM:
” CFN, It sounds like you are a realtor. My deepest sympathy is extended to your family. In my opinion, and mine alone, with absolutely no outside medling, I humbly and respectfully submit that you and your family get exactly what you deserve. The lies coming from the Real Estate Industrial Complex have spawned the disaster which is about to engulf us all. In a just society you and your cohorts would stand trial for criminal conspiracy to defraud America. The appraisers, the lenders, the realtors the builders all knew what was being done was a crime. Let the trials begin! “
Another observation.. we went to the local Toyota dealer yesterday to look at a new Tacoma for my friend. Lots of salesmen and few customers(us and one other family).
The sales men approached us, he ended up being decent(didn’t know anything about cars or car sales, but wasn’t pushy and seemed to be honest), but he did say that he was just laid off from a mortgage lending company. Makes you wonder what all of the construction workers and lenders are gonna do now?
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