Housing Construction Nearly Ceases In Some Markets

May 5, 2008

Six. That's how many housing starts there were in the Marysville-Yuba City area in March.

This is an area with a population of more than 150,000 people, an area that has needed four digits to count annual housing production during recent years.

But in March 2008? Six housing starts. That's the definition of a real estate slump.

We've been hearing for more than a year that the housing market has tanked. We all know about the housing foreclosure disaster. But it took the statistics released recently by the California Building Industry Association (CBIA) to truly slap me upside the head.

What got my attention was all of the metro areas where the number of housing starts during March was in the double-digits.

El Centro: 31.

Vallejo-Fairfield: 16.

Redding: 17.

Ventura County: 73.

And there were others. Heck, "fast growing" Stanislaus, Merced and Madera counties combined didn't see 100 housing starts in March.

Orange County managed 137 housing starts that's combined single-family houses and multi-family units in a county of more than 3 million people. San Diego County racked up 193 starts, including exactly eight multi-family units.

Statewide, there were 4,713 housing starts in March. That's down 65% from March 2007, and down 75% from March 2005 a time when the housing market was still flying high. Sure seems like a long time ago.

At the start of the year, the CBIA predicted California would produce 128,000 new housing units this year. Considering there were only 16,287 housing starts during the first quarter of 2008, the CBIA forecast appears optimistic in the extreme. Keep in mind that builders produced about 190,000 units annually from 2002 through 2006.

Back in February, we reported that the housing market appeared to be evolving, with infill and multi-family activity remaining stronger than construction of single-family housing tracts. So far this year, the numbers for multi-family housing do not support our thesis. But it is true that the downturn is most dramatic in the exurbs of the Inland Empire and the Central Valley.

You can find the latest CBIA statistics on housing starts at the CBIA website.

The housing slowdown is affecting many aspects of the economy, and it's hitting city halls and county administration centers. Cities and counties are laying off planners, building inspectors and plan checkers in droves. The Appeal Democrat newspaper in Marysville reports that the Yuba County Community Development and Services agency is shrinking from 32 employees to 16. That will happen when construction activity comes to a halt.

Tough times that show no indication of letting up.

Paul Shigley