The Legislative Analyst Office provided the California Fiscal Outlook forecasted residential housing permits to increase by 31,000 units to 120,000 units total in 2014. Wells Fargo expects 2014 to experience a 12% increase in new housing units from 2013, while the California Economic Forecast estimates California producing 115,700 new units in 2014 – a 36% jump from 2013.
CHF|CIRB projects California’s year-end totals to land somewhere in the middle of 95,000 to about 109,000 units. California has issued 17,613 single family and multi-family units from January to March of this year. Compare this to the same time last year, and we see a 14% decrease in permit activity. This is should not be a huge surprise, since increasing construction costs and lack of developed land lots play into our sluggish productivity.
However, there is a positive attribute to these first-quarter decreases: lowered unemployment rate, population growth, and home price stability all point towards housing demand and subsequent construction activity.
Climbing out of the downpour of the great recession has been a slow journey for the California homebuilding industry. As the clouds lift, there is a silver lining that conveys improvement in housing market conditions in the coming years. While it is too early to know the production level of construction in 2014, the industry has remained optimistic.