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San Diego County Sees Homebuilding Increase to Start the Year

The first quarter of the year saw San Diego residential building bounce back after a slow 2019.

Homebuilding in San Diego County nearly doubled from last year in the first quarter of 2020 despite COVID-19 closures. 

While a welcome sign for housing advocates it comes with two caveats: San Diego County had the biggest drop in residential construction in Southern California last year so any uptick would look impressive. Also, much of the building in the first quarter was before the virus shut down many businesses.

The county constructed 2,313 homes — including single-family houses, condos and townhouses — in the first three months of the year, said the Real Estate Research Council of Southern California. 

That was a 96 percent increase from the same time last year, and up 48 percent from the last quarter of 2019. 

Murtaza Baxamusa, director of planning and development for the San Diego Building Trades Council, said large residential projects take years to come to fruition and it’s not always possible to pump the brakes — even during a global pandemic. 

“Once you start pouring concrete, your concrete pouring is not stopping,” he said. 

Baxamusa said job and income losses will likely slow the industry but it is too early to speculate how much. He said the first type of building to decrease will be in wooden stick frame construction, mainly for townhouses and single-family homes, but will take longer to filter out to apartment buildings.

He said stick frame operations can quickly slow down, or speed up, depending on demand. Large apartment towers, like the ones going up downtown at the moment, are much more difficult to stop once construction has started. 

Since 2015, San Diego County has typically built 9,500 to nearly 10,000 homes a year. But last year, the county was below that with 8,053 homes constructed. Industry experts cited a variety of issues for the slowdown but it was mainly attributed to a drop in apartment construction after years of intense building and declining rent gains. 

In the first quarter, single-family homes had an increase of 85 percent from last year, with 1,154 homes constructed. Multifamily construction was up 108 percent with 1,159 permits pulled. At this rate, both categories are on track to exceed or meet average building totals for the last few years. However, two statewide forecasts predict a slowdown in building. 

The California Association of Realtors predicts 84,320 homes will be built this year, down 24 percent, and the state Department of Finance predicts 89,315 homes to be constructed, down 19.5 percent. The Realtor organization’s analysts predict a slow economic recovery from the massive job losses of the last few months.

Construction was declared an essential service from the beginning of the quarantine on March 19, allowing it to be one of the industries less impacted by the shutdown. San Diego County unemployment numbers from mid-April show 4,500 construction jobs were lost from March to April, a small fraction of the total 195,000 jobs.

Alan Nevin, industry expert at Xpera Group, wrote in a recent analysis that construction still falls into a “little hurt” category for job losses, unlike “big hurt” categories of restaurants, bars, hospitality, retail and arts, entertainment and recreation. 

In his analysis for the Greater San Diego Association of Realtors, Nevin was optimistic about the home market being strong after companies start reopening. Perhaps encouraging more homebuilding, the median home price in San Diego County in April, $594,500, was up 4.3 percent in a year. 

Building permits for the first quarter included increases in retail construction, but was down for office buildings, hotels and industrial buildings. 

Residential building was up 13 percent for all of Southern California in the first quarter. San Diego County had the biggest annual increase, but was followed by Los Angeles County (up 19 percent), Riverside County (up 16 percent), and San Bernardino County (up 2 percent).

Some areas saw a drop in construction, with the most being Ventura County, down down 42 percent. It was followed by Santa Barbara County (down 40 percent) and Orange County (down 24 percent). 

Data for building permits in the research council’s report is provided by the Construction Industry Research Board, which contacts all 58 counties and 538 cities in California for permit data. It sometimes is different from the widely used Census data that provides estimates and has been criticized for a wide margin of error.