It was not a good week for the residential real estate sector. The subprime meltdown took a big chunk out of Calabasas-based Countrywide Financial Corp.’s quarterly profit Thursday. The bottom of this pit has not been reached, Freddie Mac head Richard F. Syron said Friday. And the housing slump could pull the country into recession this year, the government said Friday. Last month, builders across the state pulled permits for 7,743 single-family homes statewide, up about 23 percent from the previous month but down 31 percent from March 2006. On the multi-family front, builders pulled 5,408 permits, up 70 percent from the previous month but down just under 5 percent compared to March 2006. It adds up to 13,151 homes, condos and apartments in the works, according to the statistics compiled by the Burbank-based Construction Industry Research Board. The monthly uptick is good news. But things don’t look so great versus last year, the one when the residential real estate slump packed on muscle. In this year’s first quarter, production started on 32,646 homes, apartments and condos, an annual decline of 28 percent. Our neighbor, the Inland Empire, shares a lot of the responsibility. Association chief economist Alan Nevin attributes about 40 percent of the entire year-over-year decline in single-family production to the Riverside/San Bernardino area. That market now has the nation’s third highest rate of foreclosure, and that news came last week, too. Riverside and San Bernardino counties were the latest haven for first-time buyers, and builders responded by churning out product. Problem is, those buyers had to drive to work in Los Angeles or San Diego counties, and rising gas prices tend to chew away at paychecks just like rising house payments do. So sales cooled. “Residential homebuilders to a large degree have reverted to a `just in time’ mentality that results in starting homes in line with current demand rather than being ahead of demand,” Nevin said. “The result of this strategy is to maintain a modest standing of unsold inventory and economic viability.” He also sounds a reoccurring theme, too. Yes, the housing market is in the dumps. But the overall economy is OK. So far. Additionally, while the Inland Empire continues to struggle, housing production in the state’s second-largest single-family market – Sacramento – is down just 1.4 percent for the year. Builders have not been putting up enough homes to meet demand for years and there are lots of reasons why. Now sure does not seem like the proper time to head on down to the planning department and leave with a briefcase full of permits. But the association says an annual drop in production can’t be good news for renters looking for their first home because prices are not likely to fall. For example, Los Angeles County saw big annual sales declines in the first quarter but the median home price, the point at which half the houses cost more and half less, reached a record. Again. “California needs new homes in all price ranges,” said Robert Rivinius, association president and chief executive officer, “and given the ever-rising fees and constraints on housing, it’s all but impossible to meet the need in the entry-level market, where the need’s the greatest.” [email protected]
(818) 713-3743160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! Even what starts out like good news can turn the other way in this market. Like housing starts. They rebounded in March, according to the California Building Industry Association. As measured by the number of building permits issued, housing starts jumped nearly 39 percent in California in March versus the prior month, the Sacramento-based trade group noted. And while activity in both single-family homes and condo and apartment construction made “strong” monthly gains, the activity is still well under the year-ago level.