Permit data shows a development slump may be on the way
- By Elijah Chiland
- on
Builders in Los Angeles County are on track to complete nearly 10,000 new homes before the end of the year, according to a new report from real estate company Marcus and Millichap.
The 9,400 units of housing on the way in the second half of 2019 is higher than the number of units constructed in all of 2018—or 2017.
Most economists agree that building new housing is a key part of addressing steep rental prices and home costs throughout the state. Gov. Gavin Newsom pledged last year to oversee construction of 3.5 million new homes by 2025. If distributed according to population, that would leave LA County responsible for contributing nearly 900,000 residences to that total.
Projects have been wrapping up at a relatively high rate over the last year, though not high enough to meet the pace proposed by Newsom. From June 2018 to June 2019, 10,680 units opened. That was double the roughly 5,300 completed in the 12 months prior.
New U.S. Census data also suggests this miniature boom won’t last.
In the first six months of 2019, developers in the Los Angeles metropolitan area (Los Angeles and Orange counties) received permits to build 13,015 homes. If that pace keeps up, the region will permit nearly 3,500 fewer homes in 2019 than during the prior year—a drop of 12 percent.
The local dip in new permits is part of a statewide decline in new housing development brought on partly by rising construction costs.
Still, at the end of June, nearly 28,000 new units were under construction in Los Angeles County, with most expected to wrap up by the end of 2021.
That’s a lot of new homes on the way to an area suffering from the effects of a profound shortage of affordable housing. But the authors of the Marcus and Millichap report argue that the region’s extremely low vacancy rate could prevent those new units from making a significant impact on the local cost of housing.
With just 3.6 percent of rental homes sitting empty (and thus ready for a tenant), there’s room in the market for new options; the report’s authors write that an “influx” of newly built apartments is unlikely to create “oversupply concerns” for investors.
That means that even a small surge in local development may not move the needle much for those struggling to afford rent.
According to a report released earlier this year by the Federal Home Loan Mortgage Corporation, the gap between wages and rents in Los Angeles is the third-widest of any metropolitan area in the country.
Is this any way to run a city or a state?
Letting people build what the society needs to function on their own land? What do you want to happen? The government takes away everyone’s property rights and prohibits any new housing, despite attracting and creating thousands of new, high-paying jobs?
Come on man. You’ve seen my posts. Obviously I mean this construction "boom" is totally inadequate to our actual housing needs.
"Gavin Newsom pledged last year to oversee construction of 3.5 million new homes by 2025. If distributed according to population, that would leave LA County responsible for contributing nearly 900,000 residences to that total."
The 900,000 for LA County, in 6 years mind you, would be like adding another Long Beach, Glendale, Torrance and Pasadena. The 3.5 million number is insane and has been dismissed by everyone except the developers and density shills as fake news. McKinsey should be ashamed of themselves.
Time to give credit where credit is due. Nice job LA!
By calzada on 08.13.19 9:38am
if you eliminated rent stabilisation, welfare, and deported all the illegals, the "crisis" would resolve itself.
simple as that.
Go fuck yourself.
Eliminating the illegal alien population would significantly lower the demand and thus increase the supply of vacant lower-end rentals and likely cause rental prices in lower-end rentals to come down.