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California Multi-Unit Housing Construction Hits 26-Year High

May 2, 2017
When it comes to apartment construction, California cities are clearly doing their part according to a new demographic report by the California Department of Finance (DOF), which indicates that apartment construction in the state is at a 26-year high.
 
DOF’s data appears at odds with a narrative that has been prevalent in recent housing debates in the state Capitol that seek to levy blame on local government for the recent decline in statewide housing production, which has never fully recovered since the last recession. State policy makers should pause and consider this information.
 
“This year marks the first time since 1991 that a net of over 50,000 multi-family housing units have been added to California’s housing stock,” states the DOF summary of the report. The report also asserts that overall state net unit growth in completed housing units for 2016 was up over 31 percent from the previous year.
 
A major factor in the lack of overall statewide housing production problem appears to lie with single-family production, which has lagged severely since the Great Recession. Between 2000 and 2007, California’s single-family housing construction ranged between 100,000 to over 150,000 units per year. Single-family construction has not recovered since the depth of the recession in 2009. It is now finally approaching the 50,000 unit range. Potential buyers in this recovery face a number of challenges including difficulties saving for down payments and stiffer mortgage underwriting standards.
 
Recent press reports have also documented how despite permits being issued, developers — given market conditions — have been slow to respond. An article in the Sacramento Bee, “Natomas loses its housing mojo as developers hesitate to build,” is an example.
 
This graph from the Economic Outlook section of Gov. Jerry Brown’s FY 2017-18 January budget proposal focuses on the state’s economic outlook and reflects the impact that the California recession has had on housing construction trends.DOF-chart.jpg


 
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