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California Homebuilding Depression Expected to Deepen in 2009
Forecast Calls for Record-Low 63,400 Housing Starts; CBIA calls for Quick Action on Stimulus Measures to boost sagging housing market and economy.
Housing production in California in 2009 is expected to decrease from the already record-low numbers seen in 2008, the California Building Industry Association announced today, leading CBIA officials to strengthen the call to state and federal lawmakers to enact a homebuyer tax credit in hopes of reinvigorating the housing market and the economy.
The Association is forecasting just 63,400 units will be produced in 2009, a 3 percent decrease from the record-low 65,380 units produced in 2008. In comparison, the low point of the homebuilding recession in the early 1990s was 84,656 units in 1993, while the worst year during the recession of the early 1980s was 85,656 in 1982. To meet the need for new housing generated by population growth, the state estimates builders should produce about 220,000 new homes and apartments annually.
Robert Rivinius, CBIA’s President and CEO, said the prospect of having another year of record-low housing production should be a wake-up call to policy makers to enact housing stimulus measures to reduce any further loss to the industry and the overall economy.
“The housing industry is an extremely productive economic generator when operating at normal levels, helping to create jobs and generate much-needed revenue for state and local governments,” Rivinius said. “We will continue to ask state and federal lawmakers to enact a tax credit for new homebuyers, which has proven in the past to be an effective means of revitalizing distressed housing markets.”
Rivinius cites the temporary homebuyer tax credit enacted by Congress during the 1970s when the housing market was going through a similar downturn.
“Within months of its enactment, home sales doubled and within two years, new housing construction was back to normal levels nationwide,” he said. “We continue to believe that in today’s economic climate, a tax credit for new homebuyers would provide a much needed jolt to the languishing housing market, and in turn, the entire economy.”
He also noted that it is imperative that banks work with homebuilders on existing projects and again start lending funds for new housing projects in order to spur job-generating new-home construction.
The forecast, prepared by the Construction Industry Research Board, predicts California will produce 30,000 single-family units in 2009, down 9 percent from the 33,048 constructed in 2008, and 33,400 multifamily units, up a modest 3 percent from the 32,332 permits issued in 2008.
“These numbers do not bode well for our industry, or the economy, and we could be in for a very rough year,” Rivinius said. “We hope our lawmakers at the state and federal level will recognize how vital a healthy housing market is to the overall economy and enact stimulus measures immediately to help our industry and to help the overall economy from falling further into recession.”
The Construction Industry Research Board (CIRB) is a nonprofit research center established in 1974 to provide statistical information on the