“Swift swings” takes a quick peek at one economic trend.
The number: Southern California homebuilding has cooled as high mortgage rates complicate developers’ business plans.
The source: My trusty spreadsheet looked at Census Bureau building permit data for Los Angeles, Orange, Riverside, San Bernardino and San Diego counties for the three months ended in July to gauge the pace of new housing being created.
Developers submitted permits for 15,109 housing units in the five counties, down 13% in a year, but still 7% higher than the five-year period ending in July 2022.
The planning chill will disappoint house hunters, apartment seekers and policymakers alike, who all hoped the recent homebuilding surge would continue helping increase the region’s affordability. It will be interesting to see how developers react to the cheaper mortgage rates of the past few weeks.
The slowdown in total housing permits was fairly universal across the region.
Los Angeles and Orange counties: 7,163 permits past three months, down 14% in a year and off 5% vs. previous 5 years.
Inland Empire: 4,670 past three months, down 13% in a year but up 28% vs. previous 5 years.
San Diego: 3,276 past three months, down 14% in a year but up 14% vs. previous 5 years.
The construction chill varies depending on the product’s target – renters or homeowners. Ponder two slices of the permit data …
Multifamily permits plummeted as many apartment builders, the bulk of this permit category, pulled back. A construction surge created too many empty rentals and stalled rent hikes.
Southern California: 7,819 permits past three months, down 19% in a year but flat vs. the previous 5 years.
LA-OC: 3,984 past three months, down 21% in a year and off 20% vs. previous 5 years.
Inland Empire: 1,394 past three months, down 9% in a year but up 82% vs. previous 5 years.
San Diego: 2,441 past three months, down 21% in a year but up 19% vs. previous 5 years.
Single family permits dipped, too, with homebuilders facing rate-skittish house hunters.
Southern California: 7,290 permits past three months, down 7% in a year but up 17% vs. previous 5 years.
LA-OC: 3,179 past three months, down 3% in a year but up 25% vs. previous 5 years.
Inland Empire: 3,276 past three months, down 14% in a year but up 14% vs. previous 5 years.
San Diego: 835 past three months, up 13% in a year and flat vs. previous 5 years.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
