Loooking at Orange County’s Past Year Sheds Light on ’86 : Housing Construction

Housing construction rose in Orange County in 1985, boosted by the availability of lower cost financing and by the triple threats of revenue bond financing cutbacks, reduced investment tax incentives and more restrictive building codes in 1986.

Permits issued for new housing in Orange County jumped to an estimated 18,400 in 1985, up from 17,437 in 1984.

But without the political threats of 1985 to propel new starts, Orange County housing permits are expected to drop to 16,700 next year, according to the forecast of the Construction Industry Research Board in Burbank.

The board’s research director, Ben Bartolotto, said that most of the increase in building permits this year was for multifamily housing, especially apartments. In 1985, permits were issued for 10,200 multifamily units, up from 7,648 units in 1984. However, he estimated that the number would decline to 7,300 next year.

Bartolotto attributed the surge in apartment building to fears by developers that the U. S. Congress would eliminate favorable tax treatment of new apartments in the pending tax reform package. That fear, Bartolotto said, propelled developers to accelerate projects that they otherwise might have delayed into the new year.

Bartolotto said developers were also prompted by a greater supply of below-market-rate revenue bond financing--and the possibility that such favorable financing would end in 1986--and by the desire to avoid costly building requirements for the handicapped that went into effect Sept. 15.

Although apartment building soared, permits issued for single-family houses in the county in 1985 dropped an estimated 16% to 8,200, down from 9,789 the year before. However, the Construction Industry Research Board predicts the number will increase 17% to 9,600 in 1986.

The burst of new housing was good news for many builders, especially those who switched to apartment houses.

“1985 has been a good year for our company . . . one of the best, although not the greatest,” because of stimulation from lower interest rates, said William Lyon, chairman of the Newport Beach-based William Lyon Co who said his company became “heavily involved” in building apartments this year.

Lyon said that his company built about 2,000 homes in California in 1985 and expects to build more than 2,500 in 1986.

Al Gobar, a real estate market research consultant in Brea, said he believes 1986 will also see a revival of buyer interest in condominiums, which generally were not big sellers in 1985. He said as apartment rents rise, the monthly payments on condominiums look more attractive.