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Fewer Homes Are Being Built Here

June 11, 1988

As far as housing construction is concerned, slower growth is a fact--if not the law--in Orange County.

Building permits issued during the first three months of 1988 totaled 39% fewer housing units than the permits issued in the year-earlier period, according to data released by the Construction Industry Research Board. Single-family units declined 18% from a year ago, and multifamily units--which include apartments and certain types of condominiums--plummeted 55%.

Statewide statistics tell a similar story. Single-family permits declined 6% in the 1988 first quarter, and multifamily permits fell 42%.

The sharp drop-off in multifamily construction doesn't surprise David Parry, a real estate researcher and professor at Cal Poly Pomona. He said builders are aiming more for middle- and upper-class buyers, who prefer single-family homes. Parry also cited changes in federal tax law that make investing in rental properties less attractive, such as a lengthened depreciation period and the loss of some deductions related to rental income and expenses.

Parry predicted a continuing gap between the number of potential buyers and the number of new homes built. "California is adding about 400,000 people a year, and housing isn't being built nearly fast enough to accommodate them," he said. Parry compared the current buying frenzy in the state to the 1976-78 period, but pointed out that the latter occurred at a time of high general inflation. In contrast, Parry said, the current run-up in prices "is driven by housing market conditions and the strong state of the California economy."

Orange County had a bigger percentage drop in total permits than Los Angeles County (off 30%) and San Diego County (off 29%). Riverside/San Bernardino, where relatively low-cost housing is being built, had a 24% increase in permits. But even there, multi-family units were up only 1.4%.

BUILDING PERMITS ISSUED FOR HOUSING UNITS YEAR-TO-DATE COMPARISONS

SINGLE-FAMILY UNITS*** 3 Months* 3 Months % Metropolitan Areas** 1988 1987 Change Orange County 2,307 2,800 -17.6 Los Angeles 3,893 4,581 -15.0 Riverside-San Bernardino 9,359 7,114 +31.6 San Diego 2,631 4,308 -38.9 Oakland 1,760 2,703 -34.9 Oxnard-Ventura 946 560 +68.9 San Jose 969 554 +74.9 San Francisco 396 371 +6.7 Sacramento 2,832 2,710 +4.5 STATE TOTALS 33,422 35,624 -6.2

TH

Orange County 1,718 3,838 -55.2 Los Angeles 7,233 11,395 -36.5 Riverside-San Bernardino 2,642 2,605 +1.4 San Diego 2,432 2,797 -13.0 Oakland 681 1,371 -50.3 Oxnard-Ventura 167 387 -56.8 San Jose 344 678 -49.3 San Francisco 445 1,324 -66.4 Sacramento 723 1,347 -46.3 STATE TOTALS 18,160 31,049 -41.5

TOTAL HOUSING UNITS 3 Months 3 Months % Metropolitan Areas** 1988 1987 Change Orange County 4,025 6,638 -39.4 Los Angeles 11,126 15,976 -30.4 Riverside-San Bernardino 12,001 9,719 +23.5 San Diego 5,063 7,105 -28.7 Oakland 2,441 4,074 -40.1 Oxnard-Ventura 1,113 947 +17.5 San Jose 1,313 1,232 +6.6 San Francisco 841 1,695 50.4 Sacramento 3,555 4,057 -12.4 STATE TOTALS 51,582 66,673 -22.6

** Metropolitan areas consist of one or more counties.

*** Single-family housing includes detached, semi-detached, rowhouses, and townhouse units. Rowhouses and townhouses are included in single-family housing when each unit is separated from the adjacent unit by an unbroken ground-to roof party or fire wall. Condominiums are included in single-family housing when they are of zero-lot-line or zero-property-line construction; when units are separated by an air space; or, when units are separated by an unbroken ground-to-roof party or fire wall.

**** Multi-family housing includes duplexes, 3-to-4-unit structures, and apartment-type structures with five units or more. Multi-family housing also includes condominium units in structures of more than one living unit that do not meet the above single-family structure definition.

* Most recent figures available

Source: Construction Industry Research Board using data from the U.S. Department of Commerce, Bureau of the Census, and individual jurisdictions.

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