CA single- and multi-family housing starts

SFR and Multi-Family Residential Construction

Chart last updated 2/27/2011

Chart last updated 2/27/2011

Data courtesy of Construction Industry Research Board

*Forecasts are made by first tuesday in January and adjusted in July based on current new homes sales trends, actual construction starts and government measures taken in reaction to national and state economics.

TRENDS:

• 1,506 SFR starts were originated in January of 2011. This is a 45% drop from December 2010. A large decline from December to January is not historically abnormal, but this is the most dramatic one-month drop in SFR starts since before the start of the Great Recession.

• The pace of single family residence (SFR) construction during January 2011 was at an annual rate of 22,100 starts; 27% below one year ago.

• The present trend in the number of SFR starts is flat, following a downward trend that lasted from 2004 through February 2009.

• The most recent peak year in SFR starts was 2005, with 155,322 starts, and the most recent trough year is 2010 with a total of 25,387 SFR starts.

• Average dollar value of an SFR start in January 2011 was $306,444. This is 19% more than one year ago, and 40% more than the peak year of 2005.

FORECAST:

• The forecast for total SFR starts in 2011 by the Construction Industry Research Board (CIRB) is 33,000. This is up 30% from 2010.

• first tuesday’s own forecast for total SFR starts in 2011 is 35,000, up 38% from 2010.

• The trough year for SFR starts in the Great Recession was most likely 2010, and the next peak year for SFR starts is likely to occur during the three year period of 2016-2018, as forecast by first tuesday.

APARTMENT/CONDO CONSTRUCTION TRENDS

• 1,414 apartment/condo starts were originated in January 2011. This is a 42% drop from December 2010.

• The pace of apartment/condo construction during January 2011 was at an annual rate of 17,500 starts; 22% above one year ago.

• The present trend in the number of apartment/condo starts is flat, following a downward trend that lasted from 2004 through May 2009.

• The most recent peak year in apartment/condo starts was 2004 with 61,543 starts, and the most recent trough year is 2009 with a total of 10,967 apt/condo starts.

• Average dollar value of an apartment/condo start in January 2011 was $132,140. This is 4% more than one year ago, and 26% more than the peak year of 2004.

FORECAST:

• The forecasted total apartment/condo starts in 2011 by the Construction Industry Research Board (CIRB) is 29,000. This is up 49% from 2010. Note that CIRB forecasts tend to be set artificially (and unreasonably) high in the first months of the year, and are usually readjusted downward as time passes.

• first tuesday’s own forecast for total apartment/condo starts in 2011 is 20,000, up 2% from 2010.

• The trough year for apartment/condo starts in the Great Recession occurred in 2009, with the next peak year for apartment/condo starts likely to occur during the two year period of 2016-2017, as forecast by first tuesday.

STATISTICS RELATED TO CALIFORNIA HOUSING:

• 8.7 million SFRs existed in California in January, 2009 (from the CA Dept. of Finance).

• Population growth in California is currently at an annual pace of 427,000 (according to the US Census Bureau).

• The number of people employed in California in December 2010 was 14,016,100 (from the CA Employment Development Dept.), down 1,332,100 (9%) from the December 2007 peak of 15,348,200.

• The downward trend in the number of California jobs has ended, and is beginning to rise once more (though slowly). [For more detailed information on current employment trends, see first tuesday's Market Chart, Jobs Move Real Estate]

• The number of vacant homes and apartments/condos was 500,000 in early 2009, as reported by the USPS. The US Census Bureau reports that the rental vacancy rate in 2009 was 7.6%, and the SFR vacancy rate was 2.2%. [For more on vacancies in California, see first tuesday's Market Chart, California Residential Vacancy Rates]

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