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What building permits tell us about San Diego's homebuilding

San Diego County had the biggest pivot away from the traditional house in Southern California last year.

The county’s permits for single-family homes dropped by 23 percent in 2016, more than any other Southern California county. It also had the second-largest increase in multifamily construction (condos and apartments) in the region, said the Real Estate Research Council of Southern California.

Changes in types of dwellings likely mean future buyers will have limited options if they would like a house, or be required to drive farther.

Nearby Riverside County has taken over much of San Diego’s housing demands. It had the biggest drop in multifamily housing permits in Southern California and the largest increase in single-family permits.

“You get a lot of value for your money in Riverside, but the commuting is terrible,” said Alan Nevin, director of economic and market research at Xpera Group, a real estate analysis firm.

A newly built home in Riverside County is $406,937, nearly $225,000 less than a new home in San Diego County. A rush-hour commute from downtown San Diego to Temecula in Riverside County can last more than an hour and a half.

Nevin predicted more single-family home and townhome construction in South County this year, yet it will take time to catch up.

There were 2,409 single-family home permits issued in San Diego County in 2016, down from 3,123 the year before. Riverside County had 5,308 single-family permits, up from 4,439 the previous year.

The changes in housing types could affect various industries in unforeseen ways, like home re-modeler company Christopher Lee Home in Normal Heights. Owner Chris Hallisey said it mostly sticks to houses, which most-recently include a 1909 historic home and a newly built townhome at the Civita project in Mission Valley, because condos can be difficult for his industry.

He said high-rise condos are a challenge to remodel because they require more liability insurance in case anything in the building is damaged, do not pay as well as a house, sometimes come with stringent homeowner association rules and they can be difficult to get materials up in an elevator (and building’s usually charge a deposit fee to use it).

“But, of course, we all need to adapt,” Hallisey said. “If there’s not as many single-family homes being built, we will adapt to that.”

Despite concerns about the type of housing, there were some reasons for housing advocates to be optimistic. In total, San Diego County had 9,972 new housing permits last year, which was the fourth highest since 2005.

The number of new home permits was esentially unchanged from the previous year, but it was still better than Los Angeles and Santa Barbara counties where fewer homes were built year over year.

Also, fewer San Diegans are defaulting on their home loans. There were just 4,353 defaults in 2016, the lowest number in more than a decade. In 2009, 38,308 San Diegans defaulted on their home loans.

A reflection of rising prices, San Diegans took out $23.2 billion for residential purchases last year — more than double what they borrowed just four years ago.

Most experts predict there will be more housing built in Southern California in 2017, with the majority of it multifamily, said the state Department of Finance and the UCLA Business Forecasting Project. However, the California Association of Realtors, taking a more cautious tone, predicted in February that total housing built this year would be down 1 percent.

Other types of building in San Diego County followed recent trends. There were 51 permits for office buildings, down from 84 the previous year, the council said. Retail buildings, at 121 permits, were down from 194 in 2015.

Permits for industrial buildings were down 76 percent after a surge in construction the previous year. Hotel and motel building was up with 96 permits in 2016 compared to 82 the previous year.

phillip.molnar@sduniontribune.com (619) 293-1891 Twitter: @phillipmolnar

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