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State Holding Lead in Home Construction

February 23, 1986|DICK TURPIN

Not unexpectedly, California maintained its national lead in housing production during 1985 and approached near-record levels in two major categories.

Semiofficial data shows that 270,883 residential building permits were issued, just 26 under the peak year of 1977. Even though final 1985 totals--awaiting reports from some Central California communities--could tip the count up or down, the final production number will be impressive.

Another runner-up mark was reached in the number of multifamily-unit building permits issued. Builders filed permits for 157,238 such units, second only to the 190,000 permits issued way back in 1963.

Translating production totals, California claimed 15.6% of all residential building permits issued in the nation last year. Florida and Texas followed with 11.8% and 8%, respectively.

Forrest Maurer, president of the Sacramento-based California Building Industry Assn., said that except for decreases in home construction in Bakersfield, Chico and Stockton, all other areas reported gains last year, ranging from 113% in the Vallejo-Fairfield-Napa region to 2.8% in Riverside-San Bernardino.

Four factors weighed heavily in the near-record issuance of building permits for multifamily housing, concentrated in the Los Angeles, San Diego and Sacramento areas, Maurer noted.

He listed them as $2.8 billion in mortgage revenue bonds available to finance rental housing construction, a state building code change requiring handicapped access in future apartments (builders' permits got them under the wire), the anticipation and possibility of pending tax reform being unfavorable to investment in rental housing and the existing need for rental housing statewide.

In the record year of 1977, 65% of the 270,909 building permits were for single-family dwellings, according to Ben Bartolotto, director of the association's Construction Industry Research Board in Burbank; the corresponding figure last year was only 42%, supporting Maurer's citation of the four related reasons for the big change.

The statewide total of 270,883 permits issued last year was greater by 20% than the 1984 mark, while the average new-home price last year showed an increase of 6%--higher than expected, considering that the rate of inflation ranged downward from 4.8% for the Los Angeles-Long Beach-Anaheim market to 3.8% for the nation.

Single-family home construction increased only 1% between 1984 and 1985, but with the continuing stability in interest rates, builders expect a greater increase for 1986.

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