State Needs 240,000 Homes Every Year

Housing starts in the state of California throughout 2005 declined by 2.7% from 2004, according to figures released today by the California Building Industry Association.

And although it's an old point, the disparity in the number of multi-family units still deserves to be emphasized. It is criminal that a city the size of Los Angeles built only slightly more multi-family units than it did single-family units in the same one-year period. It hints at the real problem here — a lack of motivation for builders to pursue cheaper, multi-family housing. Why bother doing that and helping people in the community when you can build mcmansions and sell them for a million dollars each? And yet, Los Angeles was the leader in building multi-family units for the entire state!

As CBIA Chairman Layne Marceau says in the CBIA news release: "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. of course, the state built only 207,154 last year.

Here's an excerpt from the CBIA press release, which is the source of the chart above:

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

Despite the strongest two-year production numbers in 15 years, however, homebuilders 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," warned Layne Marceau, CBIA's Chairman and a Bay Area homebuilder.

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.

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).

2005 marked only the fourth time since 1980 that single-family production exceeded 150,000 homes.

"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.

— The Boy in the Big Housing Bubble