Housing Starts Increase 8% in the State in 2004

California housing permits rose nearly 8% last year to surpass 200,000 for the first time in 15 years, yet the rate of growth is expected to stall this year, industry experts said Thursday.

Last year, construction was started on 210,527 houses and condominiums, with the Inland Empire and Los Angeles County leading the state, according to the Construction Industry Research Board.

Because of lower land costs, the Inland Empire, with 52,000 housing starts last year, was the hot spot for new tracts of single-family houses.

Meanwhile in Los Angeles, with little raw land available, builders focused instead on condos and other attached homes. Almost 27,000 permits were issued in the county -- the majority of them for multifamily projects.

“Production of 210,000 units is strong evidence of the confidence in the state’s economy as well as the demand for ownership homes and condominiums,” said Alan Nevin, chief economist for the California Building Industry Assn., a trade group.

Yet Nevin expects about the same number of permits to be issued this year. “Builders are having a difficult time getting lots for single-family homes,” he said.

Other economists forecast a construction slowdown because high housing prices are damping demand. For example, in Ventura and Orange counties -- where median home prices exceed $500,000 -- starts for single-family units declined 24% and 23%, respectively.

Esmael Adibi, director of the A. Gary Anderson Center for Economic Research at Chapman University, anticipates a 13% drop in permits in the Inland Empire this year -- from 52,000 to 43,000 -- after three years of more than 20% growth.

“New-home builders are close to surpassing the potential for demand,” he said.

The building industry contends that the state could absorb as many as 250,000 new housing units a year to meet demand.

The current building boom has been a boon for firms such as Sukut Construction Inc. The Santa Ana-based land developer has the highest backlog of projects in its history, a spokesman said.

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Building permits

Percentage change from a year earlier in number of permits issued in 2004 to build single-family and multifamily housing, by area

Los Angeles/Long Beach/Glendale +25.8%

Riverside/San Bernardino/Ontario +20.8

Santa Ana/Anaheim/Irvine -2.4

San Diego/Carlsbad/San Marcos -5.5

Santa Barbara/Santa Maria/Goleta -11.6

Oxnard/Thousand Oaks/Ventura -26.3

Source: Construction Industry Research Board