State 2nd in Housing Growth, Census Data Say

California had the second-highest increase in the number of housing units of any state last year, adding 181,997 new dwellings, the Census Bureau reported.

The data released Monday underscore population shifts as people increasingly move west and to Sunbelt states. Florida had the most new homes built, and Texas was third in the most recent reporting year, from July 2004 to July 2005.

In general, the South and West dominate housing growth as well as population growth, said Robert Bernstein, spokesman for the Census Bureau. “It’s a reflection of the demographic shift.”

In California, many of the new houses were built in Los Angeles County, the Inland Empire and San Diego County.

About 500,000 new residents move to California annually and half of them end up in those three regions, said Mary Heim, chief of the demographic research unit of the state Department of Finance.

Riverside County ranked fourth among counties in the United States in the number of new dwellings, with 29,689; Los Angeles County was sixth, with 19,950; San Bernardino County was eighth, with 17,032; and San Diego County was 12th, with 13,964, according to the Census Bureau. Sacramento County was 16th, with 11,951 new dwellings.

The report defines a housing unit as a house, an apartment, a mobile home or trailer, a group of rooms or a single room occupied as a separate living quarters. The estimates are based on 2000 Census figures supplemented by administrative records, such as building permits.

Low interest rates, economic opportunity, warm weather and abundant land in inland regions have helped sustain growth in California, experts said.

“There’s just more opportunities here. As long as employment grows, people are coming to take jobs,” Heim said. “As long as there are opportunities, people will come.”

Both the rates of population and housing growth in the state are up about 1.5% over the previous year.

That is but one piece of evidence to show that builders, wary of repeating a housing implosion that ravaged California real estate during the early 1990s, are striving to calibrate housing supply to population growth.

John Karevoll, analyst with DataQuick Information Systems, sees a change from the large, multi-bedroom “trade-up” homes built in the early 2000s. Increasingly, developers are switching to condominiums and town houses to supply newcomers looking for starter homes and baby boomers and empty nesters looking to downsize, he said.

In order to sustain prices and development, builders are being careful not to oversupply the market with housing stock, he added.

“In previous real estate cycles, there’s been lots of building” and builders and lenders were stuck with a lot of inventory, Karevoll said. “But new builders pre-sell just about every building they build. They are much more cautious.”

Hasan Ikhrata, director of planning and policy at the Southern California Assn. of Governments, said redevelopment and urban in-fill building accounted for 40% of the housing growth in Los Angeles County in the last decade. The rest of the building, he said, consisted largely of single-family homes in the desert and canyons to the north.

“Some people say that there’s an overbuilding in development downtown,” Ikhrata said. “But we don’t see it from the prices and the demand.” “We see cooling in the market,” he added, but not significant price reductions in downtown Los Angeles compared with what is occurring in San Diego, where prices in the so-called urban core have dropped about 2% so far this year.

Indeed, there is evidence that the overall housing market is slowing as mortgage rates rise in the region that includes Los Angeles, Orange, Ventura, Riverside, San Bernardino and San Diego counties.

Last month, Southern California home sales fell to their lowest level in nine years as price appreciation slowed. In July, 22,712 homes closed escrow in the six-county region, a 27% drop from a year earlier, and prices rose at their slowest rate in more than six years, gaining 4.9% to a median of $492,000, according to DataQuick.

Cynthia Kroll of UC Berkeley said she, too, sees Southern California builders producing fewer single-family homes and apartments and more condominiums. But she believes the region is at the end of an extraordinary housing boom.

“We’re not likely to see drops in home prices like we saw with the dot-com companies’ ” crash after the ‘90s, said Kroll, senior regional economist for the Fisher Center for Real Estate and Urban Economics at the Haas School of Business.

“I don’t like to use the word “bubble,” but you’re likely to see a slowdown in home building going on. It’s been a wonderful era for home building in Southern California.”

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Builder’s paradise

California added nearly 182,000 new housing units according to the most recent Census estimate - second only to Florida’s nearly 247,000. Top U.S. counties for growth in housing units:

*--* Rank County, State* New units** 1. Maricopa, Ariz. 52,203 2. Clark, Nev. 35,114 3. Harris, Texas 33,698 4. Riverside 29,689 5. Miami-Dade, Fla. 21,375 6. Los Angeles 19,950 7. Lee, Fla. 19,894 8. San Bernardino 17,032 9. Tarrant, Texas 16,281 10. Fulton, Ga. 15,374 11. Orange, Fla. 14,003 12. San Diego 13,964 13. Palm Beach, Fla. 13,777 14. Hillsborough, Fla. 13,086 15. Bexar, Texas 12,333 16. Sacramento 11,951

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* California counties in bold.

** Increase in number of housing units between July 1, 2004, and July 1, 2005.

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Source: Census Bureau