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Busy builders fall short of housing needs

Going up at its fastest pace in almost 15 years, California construction still can't satisfy the burgeoning demand.

June 29, 2003|Lew Sichelman | Special to the Times

SAN FRANCISCO — California's home builders will produce more houses this year and next than they have at any time in nearly 15 years. But it still won't be enough to make up for a shortage that has persisted since the 1990s or the demand that's coming.

The California Industry Research Board expects new construction to reach 180,000 units this year and perhaps as many as 186,000 houses and apartments in 2004. Nevertheless, the California Building Industry Assn. estimated this year's output will be 50,000 houses and apartments shy of the number needed to keep pace with the Golden State's increasing population.

Robert Rivinius, chief executive officer of the trade association, put the total cumulative housing deficit in the state at close to 1 million units and warned that it is continuing to grow.

"While the housing starts data are good news for the home building industry and the state's economy, it cannot be overemphasized that we're still not building enough housing," Rivinius said at the recent Pacific Coast Builders Conference here.

Through the 1990s, annual housing production in the state was running at an abbreviated clip of 80,000 to 100,000 units a year. At the same time, the population of California grew from 29.7 million in 1990 to almost 33.9 million in 2000, according to the U.S. Census Bureau, an average gain of 420,000 people a year.

Houses still can't be built fast or cheap enough to keep up with the need, according to Harry Elliott, a builder in Folsom and president of the state builders' group.

"If we build it, customers will come," Elliott said. But because of "ever-increasing fees, ever-increasing delays and ever-increasing shortages of land we're allowed to build on," the median price of a new house in California increased nearly 15% last year to $364,000, he said.

"It's really amazing that so many officials seem to think they can increase a builder's costs by $40,000 and that none of that will be passed on to the home buyer," he told reporters at a news conference.

Even at today's record low mortgage-interest rates, "when a building lot costs $120,000, building affordable housing is out of the question," said Kent Conine, president of the National Assn. of Home Builders.

The Burbank-based construction research board projects a 7.3% jump in housing production this year and a 3.3% increase next year.

Even so, Rivinius said, it "will take a long time to make up" the state's housing deficit.

Lew Sichelman can be contacted via e-mail at LSichelman@aol.com.

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