Economic Confidence Spurring Construction : * Housing: Builders, financial backers are planning burst of activity this summer. This is expected to lessen credit that has depressed the industry.
Orange County home builders and their financial backers, apparently buoyed by economists’ predictions of an economic rebound beginning this summer, are gearing up for a burst of new construction.
And that signals a lessening of the so-called credit crunch that has kept a lid on residential construction loans during the past year.
“It is the lenders who are in the driver’s seat here, and what this says is that they are beginning to feel that housing construction isn’t as risky as they once thought,” said Dennis Macheski, research director for Price Waterhouse Real Estate Group in Newport Beach.
Builders obtained more permits in Orange County for new single-family homes in February than in any month since last June, the Construction Industry Research Board reported Friday.
And while that number is still well behind the pace set in the booming 1980s, the total number of single-family permits issued since Jan. 1 has more than doubled to 641 from the 270 issued in the first two months of 1991.
When multifamily residential units--primarily apartments--are added in, the two-month total climbs to 813 units, compared to 442 of a year earlier.
February’s permits for 374 single-family homes and 49 multifamily units were spread throughout the county with the largest concentration in the southern region, including Rancho Santa Margarita, Mission Viejo, Dana Point, San Clemente and Laguna Hills.
The increased activity certainly means that builders are growing more confident, said Macheski, but more important, it shows that lenders are increasingly willing to part with their funds.
“But that is only in residential construction,” he said. Except for a little bit of loosening on industrial projects, lenders are still staying away from non-residential projects.
“We just did a survey of the 450 largest construction lenders in the country, and 29% said they believe market conditions are good enough right now to enable them to increase residential construction lending. Another 37% said they wanted to see moderate improvement,” Macheski said.
But nearly half of those surveyed said they believe that the residential market will improve to a suitable level for renewed lending within a year, and an additional 36% anticipate a housing market recovery within 12 to 24 months, he said.
Because permits typically are issued several months before building begins, and because actual construction of a residential development can take three months or more, the permits issued in January and February represent homes that will hit the Orange County market sometime in late spring or early summer.
Residential Permits in Orange County
Builders are finding construction lenders’ pocketbooks a bit easier to get into these days, and the result is an increase in permits for new single-family homes in Orange County. Multifamily permits have fallen behind.
1989 1990 1991 1992 Month SF MF SF MF SF MF SF MF January 479 330 531 573 72 57 267 123 February 451 447 319 403 198 115 374 49 Total 930 807 850 976 270 172 641 172
Source: Construction Industry Research Board
