Home Building Permits Remain Near Record Low

Orange County home builders, struggling with more stringent credit policies, obtained permits for only 313 new residential units in February.

That is the second-lowest for any month, after January’s all-time low of 129 units, according to figures released Friday by the Construction Industry Research Board in Woodland Hills.

The county’s 30 building departments issued permits during February for just 198 single-family, detached homes and 115 multiple-family units, the group reported.

In the first two months of this year, 442 permits were issued, contrasted with 1,826 residential unit permits issued in the first two months of 1990. And at the height of the last building boom in 1986, county builders pulled permits for 2,833 residential units in January and February, the group’s records show.

The reduced number of permits has led many industry analysts and builders to warn that the county is heading into a housing shortage.

Economist James Doti at Chapman College in Orange said the county needs about 17,000 new housing units a year to meet demand over the next five years. The last time construction came close to that level was 1989, when 16,637 permits were issued. Just 11,976 permits were issued last year, and most builders expect the total to be even lower this year.

Because residential sales have been in a severe slump for six months, builders have been slashing prices to get rid of standing inventory. The tactic has worked: In the first 45 days of the year, the number of built-but-unsold homes in the county dropped 21%, to 2,646 units, according to the Meyers Group, a Corona consulting and marketing firm.

Industry analysts and trade groups generally believe that 1991 will be one of the bleakest years on record for new residential construction in the county.

And as the economy begins recovering from recession, the resulting home shortage could cause a new spurt of price increases the housing market, economists said.