San Diego County is on track to build more homes in 2018 after years of staying below historical norms.
In the first six months of 2018, there were 6,953 residential permits issued in San Diego County, a 64 percent increase from the same time last year, said a new report from the Real Estate Research Council of Southern California.
San Diego had the largest increase in homebuilding of the Southern California counties in the six-month period. Los Angeles County had an increase of 37 percent and Riverside County had 20 percent, while all other counties had a decrease from the same time last year.
“Our people are all working,” said Murtaza Baxamusa, director of planning and development for the local Building Trades Council. “The cranes are towering, the steel is going up. There is a lot of work right now. The market is relatively strong.”
San Diego County’s increase partly stands out because of a major drop off in building at the start of 2017. But, it is on track to possibly be higher than the previous years. The county issued 9,975 residential permits in 2015, 9,972 in 2016 and 9,580 in 2015.
Although going over the 10,000 mark would be notable compared to past years, it still falls short of the housing boom years. In 2004, there were 17,306 residential permits issued in San Diego County and 15,258 in 2005.
The need for more housing in California has been a political talking point for several years, most recently in the governor’s race where both candidates have pledged to increase supply.
Alan Nevin, industry analyst at Xpera Group, said the building so far this year is led by apartment construction downtown, demand for townhouses (classified as condos in multifamily permits) and an abundance of projects in the master-planned community of Otay Ranch.
“It’s basically all Otay Ranch with a little bit along (State Route) 78,” he said of new single-family homes and townhouses. “There are like 30 projects under construction in Otay Ranch, a combination of attached, detached and rental.”
Multifamily construction, condos and apartments, led building in San Diego County in the first six months. There were 4,948 multifamily permits issued, up from 2,633 at the same time last year.
Single-family home construction continued to be a small part of the market with 2,005 permits, but it was an increase from 1,603 permits at the same time last year.
Builders and industry analysts have cautioned in recent months that costs of materials and labor could slow the region’s recent surge in construction. Other concerns include the cost of Canadian softwood lumber because of tariffs, lending for large-scale projects and project slowdowns caused by a shortage of labor.
For now, the rising costs have not seemed to slow the industry, although many of the projects had already begun and were unable to stop as the cost of steel and other materials rose.
California housing groups all predict more housing will be built in the state this year, including the California Association of Realtors, California Department of Finance and UCLA Business Forecasting Project.
Other data points of note from the first six months of the year in San Diego County:
There were 146 retail permits pulled, up from 82 last year. There were 25 hotel/motel permits pulled at the same time, down from 129 the previous year.
There were 1,508 notices of default on mortgages, down from 1,817 at the same time last year.
In a sign new developments are having an impact on supply, there were 1,917 new homes sold. That’s up from 1,244 at the same time in 2017 and 1,366 in 2016.
There was $2.18 billion in construction lending, down slightly from $2.24 billion at the same time in 2017 and $2.82 billion in 2016.
Data for building permits in the research council’s report is provided by the Construction Industry Research Board, which contacts all 58 counties and 538 cities in California for permit data. It sometimes is different from the widely used Census data that provides estimates and has been criticized for a wide margin of error.