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  • Building Permits Increasing Again. Building permits for residential construction—especially those for single-family units—dropped sharply after the collapse of the housing bubble. They started to increase again in 2010. Since the housing recovery began, multi-unit permits have exceeded single-family permits—an unprecedented development in California.
  • Weakness of Single-Family Permits. The recent weakness of single-family permits results from a number of factors, such as: (1) tougher mortgage credit standards; (2) lingering negative effects from the economic downturn on the finances of individuals and families; (3) a decline in the formation of new households; (4) the smaller share of the population, compared to the past, of 35-54 year olds, who often want detached homes; (5) the limited availability of developable land in some coastal communities that now see the bulk of employment growth and building activity; (6) potentially heightened caution among developers; and (7) resistance of some local governments to additional building.
  • Housing Trends a Big Question Mark for Economy. The weakness of single-family building permits noted above suggest that Californians may be altering fundamentally their economic, lifestyle, and related choices concerning homes, as we discussed in our recent Fiscal Outlook. If these trends continue, they could result in meaningful changes in the California economy—some negative and some positive—affecting construction employment, sales taxes, property taxes, income taxes, population growth, and housing affordability. Our office anticipates releasing additional analyses of issues concerning housing supply, demand, and prices in publications over the next year or so.

Data Source: California Homebuilding Foundation/Construction Industry Research Board.


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